Kyobo Securities maintained its "buy" rating on Kakao (KOSPI: 035720) on the 14th but cut its target price by 25%, from 76,000 won to 57,000 won.
The stock was trading at 34,750 won as of 13th July, roughly 49% below its 52-week high.
The downward revision reflects a sum-of-the-parts (SOTP) valuation. Falling share prices at key listed subsidiaries and affiliates — including Kakao Pay, Kakao Bank, and SM Entertainment — combined with the disposal of Kakao's stake in Kakao Games, have eroded the group's asset value. Kyobo values Kakao's TalkBiz division (which encompasses advertising and commerce on the KakaoTalk messaging platform) at 9.27 trillion won, and its portfolio of listed equity stakes at 15.9 trillion won.
Second-quarter results are expected to come in broadly in line with market consensus. Revenue is forecast at 2 trillion won, up 4.5% year on year, with operating profit of 223.8 billion won, up 9.8%. TalkBiz advertising and subscription revenue is estimated at 374.7 billion won (+15.3%), while other platform revenue is projected at 542.9 billion won (+17.4%).
Kyobo does not expect Kakao's artificial intelligence efforts to generate meaningful revenue until 2027. The brokerage notes that Kakao's AI assistant, "Canana in KakaoTalk," has yet to integrate meaningfully with external ecosystems or enable in-chat payments, meaning the company has yet to mount any serious marketing push behind the product.
Kyobo also flagged that Canana in KakaoTalk still needs to validate its potential as an agent-based service linked to major vertical commerce partners. Announcements of relevant partnerships and a commercial service launch are anticipated within the third quarter. Meanwhile, "Canana Search," the platform's AI-powered search feature, is currently undergoing a closed beta test. After launch, the company will still need to demonstrate that the product can be connected to a viable advertising revenue model.