Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

<p>Backed by <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a> and the South Korean Internet company <a href="https://www.smartkarma.com/entities/kakao-corp" target="_blank" data-smartkarma-citation="entities:15002:1" rel="noopener">Kakao Corp (035720 KS)</a>, <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (KAK KS)</a> started off as a mobile wallet/mobile payment service capable of handling payments, remittances, and P2P transactions. While the mobile wallet business is considered rather important, as it is the foundation for creating a cashless society, mobile wallet is not really a profitable venture capable of surviving on its own (it is unable to charge sufficient amounts from merchants and customers to offset high operating costs such as IPG costs). However, the payment business provides the platform to attract and retain customers for Kakao Pay’s financial services business, which is more profitable.</p><p>With 19.5m monthly active users (MAU) (around 45% of South Korea’s adult population) as of March 2021, alongside stiff competition from Naver Pay, Toss, Payco, and Samsung Pay, it is natural that Kakao Pay’s payment business may experience a deceleration in MAU growth in the next few years.</p><p>Nonetheless, we are unrattled by the payment business’ slower growth prospects, as the financial services business, which is just starting to gain momentum, is more than capable of replacing the payment business’ lost growth potential and that too in a profitable manner.</p>

Backed by Ant Financial Services Group (6688 HK) and the South Korean Internet company Kakao Corp (035720 KS), Kakao Pay (KAK KS) started off as a mobile wallet/mobile payment service capable of handling payments, remittances, and P2P transactions. While the mobile wallet business is considered rather important, as it is the foundation for creating a cashless society, mobile wallet is not really a profitable venture capable of surviving on its own (it is unable to charge sufficient amounts from merchants and customers to offset high operating costs such as IPG costs). However, the payment business provides the platform to attract and retain customers for Kakao Pay’s financial services business, which is more profitable.With 19.5m monthly active users (MAU) (around 45% of South Korea’s adult population) as of March 2021, alongside stiff competition from Naver Pay, Toss, Payco, and Samsung Pay, it is natural that Kakao Pay’s payment business may experience a deceleration in MAU growth in the next few years.Nonetheless, we are unrattled by the payment business’ slower growth prospects, as the financial services business, which is just starting to gain momentum, is more than capable of replacing the payment business’ lost growth potential and that too in a profitable manner.

Kakao Pay IPO: Do Not Worry About Maturing MAU Growth

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

<p>Currently, the biggest controversy in the valuation presented by Kakao Pay on local streets is the inclusion of PayPal.</p><p>Of course, PayPal is similar to Kakao Pay in that the payment method accounts for the majority of sales. However, the problem is that Paypal is significantly different from Kakao Pay in terms of sales volume, service market scope, and market capitalization.</p><p>PayPal operates in global markets, with a market cap of ₩385T and sales of ₩24T. On the other hand, Kakao Pay has no business base other than the domestic market. And as of last year, Kakao Pay's sales amounted to ₩284B, which is nearly one-hundredth of that of PayPal.</p><p>In particular, Kakao Pay's share of the domestic payment service market last year was only 16.6%. Even in the local market, Kakao Pay does not have a clear advantage over competing services like Samsung Pay, Payco, and Naver Pay.</p><p><strong>In conclusion, although Kakao Pay has a fast growth rate, a direct comparison with PayPal, which has a significantly different target market size and sales level, is simply unreasonable.</strong></p><p>Paypal's growth-adjusted EV/Sales multiple came in at a whopping 81.6x. Including Paypal in the valuation peer group was the direct cause of raising Kakao Pay's valuation to an irrational level.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Kakao Pay: Growth-adjusted EV/Sale"}'>Kakao Pay: Growth-adjusted EV/Sale</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Current"}'>Current</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Excluding Paypal"}'>Excluding Paypal</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Note"}'>Note</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Sales growth rate"}'>Sales growth rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.834}' data-sheets-numberformat='[null,3,"0.00%",1]'>83.40%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.834}' data-sheets-numberformat='[null,3,"0.00%",1]'>83.40%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Growth rate adjustment factor (EV/Sales multiple ÷ Sales growth rate)"}'><strong>Growth rate adjustment factor (EV/Sales multiple ÷ Sales growth rate)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44.7619777559236}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-5]C[0]"><strong>44.76x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":26.3039095727218}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=average(R[-6]C[0]:R[-6]C[1])"><strong>26.30x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Growth-adjusted EV/Sales multiple"}'>Growth-adjusted EV/Sales multiple</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":37.33148944844028}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]">37.33x</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":21.93746058364998}' data-sheets-numberformat='[null,2,"0.00x"]' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]">21.94x</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"C = A X B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>C = A X B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Annualized sales based on 1Q21 sales"}'>Annualized sales based on 1Q21 sales</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":428.575}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩428.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":428.575}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩428.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>D</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15971.899}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩15,971.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":9401.84716963779}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-2]C[0]*R[-1]C[0]">₩9,401.8B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"E = C X D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>E = C X D</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-647.284}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>-₩647.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-647.284}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>-₩647.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>F</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market cap"}'><strong>Market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":16619.183}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]"><strong>₩16,619.2B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":10049.131169637789}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]"><strong>₩10,049.1B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"G = E - F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>G = E - F</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Number of diluted shares after IPO"}'>Number of diluted shares after IPO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":135880810}' data-sheets-numberformat='[null,2,"#,##0",1]'>135,880,810</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":135880810}' data-sheets-numberformat='[null,2,"#,##0",1]'>135,880,810</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"H"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>H</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price per share"}'><strong>Price per share</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":122307.0645516464}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]"><strong>₩122,307</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":73955.48473428874}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]"><strong>₩73,955</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"I = G / H"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>I = G / H</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>Then, if we use only the average of the other two peers excluding PayPal, the growth-adjusted EV/Sales multiple will be 26.3x. Applying this, the market cap is ₩10T, and the price per share is ₩74,000. If the same 21.51~48.49% discount rate is applied here, the market cap will range from ₩5T to ₩7.6T, and the price per share will range from ₩38,000 to ₩58,000.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Indicative price band"}'>Indicative price band</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low, excl. Paypal"}'>Low, excl. Paypal</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High, excl. Paypal"}'>High, excl. Paypal</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'><strong>Price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":63000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩63,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":96000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩96,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":38094.247093083985}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R20C3*(1-R[4]C[0])"><strong>₩38,094</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":58048.376522794635}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]' data-sheets-formula="=R20C3*(1-R[4]C[0])"><strong>₩58,048</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'>Base deal size</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1071}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩1,071.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1632}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩1,632.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":647.6022005824277}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000"><strong>₩647.6B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":986.8224008875088}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000"><strong>₩986.8B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment"}'>- Institutional allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":589.0500000000001}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩589.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":897.6}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩897.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":356.18121032033525}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2"><strong>₩356.2B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":542.7523204881298}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2"><strong>₩542.8B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'><strong>Implied market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8213.128875}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*130367125/1000000000">₩8,213.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":12515.244}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*130367125/1000000000">₩12,515.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":4966.237472564967}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*130367125/1000000000"><strong>₩4,966.2B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":7567.599958194233}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*130367125/1000000000"><strong>₩7,567.6B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Discount"}'>- Discount</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.48490301659233187}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R20C2-R[-4]C[0])/R20C2">48.49%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.21509031099783904}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R20C2-R[-4]C[0])/R20C2">21.51%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.48490301659233187}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[0]C[-2]"><strong>48.49%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.21509031099783904}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=R[0]C[-2]"><strong>21.51%</strong></td>
</tr>
<tr><td colspan="5" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>

Currently, the biggest controversy in the valuation presented by Kakao Pay on local streets is the inclusion of PayPal.Of course, PayPal is similar to Kakao Pay in that the payment method accounts for the majority of sales. However, the problem is that Paypal is significantly different from Kakao Pay in terms of sales volume, service market scope, and market capitalization.PayPal operates in global markets, with a market cap of ₩385T and sales of ₩24T. On the other hand, Kakao Pay has no business base other than the domestic market. And as of last year, Kakao Pay's sales amounted to ₩284B, which is nearly one-hundredth of that of PayPal.In particular, Kakao Pay's share of the domestic payment service market last year was only 16.6%. Even in the local market, Kakao Pay does not have a clear advantage over competing services like Samsung Pay, Payco, and Naver Pay.In conclusion, although Kakao Pay has a fast growth rate, a direct comparison with PayPal, which has a significantly different target market size and sales level, is simply unreasonable.Paypal's growth-adjusted EV/Sales multiple came in at a whopping 81.6x. Including Paypal in the valuation peer group was the direct cause of raising Kakao Pay's valuation to an irrational level.








Kakao Pay: Growth-adjusted EV/Sale
Current
Excluding Paypal
Note


Sales growth rate
83.40%
83.40%
A


Growth rate adjustment factor (EV/Sales multiple ÷ Sales growth rate)
44.76x
26.30x
B


Growth-adjusted EV/Sales multiple
37.33x
21.94x
C = A X B


Annualized sales based on 1Q21 sales
₩428.6B
₩428.6B
D


Enterprise value (EV)
₩15,971.9B
₩9,401.8B
E = C X D


Net debt
-₩647.3B
-₩647.3B
F


Market cap
₩16,619.2B
₩10,049.1B
G = E - F


Number of diluted shares after IPO
135,880,810
135,880,810
H


Price per share
₩122,307
₩73,955
I = G / H

Source: DART

Then, if we use only the average of the other two peers excluding PayPal, the growth-adjusted EV/Sales multiple will be 26.3x. Applying this, the market cap is ₩10T, and the price per share is ₩74,000. If the same 21.51~48.49% discount rate is applied here, the market cap will range from ₩5T to ₩7.6T, and the price per share will range from ₩38,000 to ₩58,000.









Indicative price band
Low
High
Low, excl. Paypal
High, excl. Paypal


Price
₩63,000
₩96,000
₩38,094
₩58,048


Base deal size
₩1,071.0B
₩1,632.0B
₩647.6B
₩986.8B


- Institutional allotment
₩589.1B
₩897.6B
₩356.2B
₩542.8B


Implied market cap
₩8,213.1B
₩12,515.2B
₩4,966.2B
₩7,567.6B


- Discount
48.49%
21.51%
48.49%
21.51%

Source: DART



Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<div class="content-highlight">
<p>The leading commercial banks currently have enormous concerns about major fintech related companies such as Kakao Bank, Kakao Pay, Naver, and Toss gobbling up various finance related service market shares. By the end of 3Q 2021, there will be three Internet banks in Korea and we think that there could be two more Internet banks by the end of 2022. </p>
<p>In order to compete more effectively against the major fintech companies such as Kakao Bank, the major commercial banks are likely to expand aggressively into non-finance related services such as food and parcel deliveries. A key reason for this is to improve their Big Data capabilities, especially in terms of better understanding their customers' purchase patterns. </p>
<p>Although we have a Positive rating on the Kakao Bank IPO, the additional competitive threats will likely to slow down the sales and profit growth of Kakao Bank considerably, especially starting 2022. Our bullish thesis on Kakao Bank rests on the relative attractive valuation of the IPO pricing. </p>
</div>


The leading commercial banks currently have enormous concerns about major fintech related companies such as Kakao Bank, Kakao Pay, Naver, and Toss gobbling up various finance related service market shares. By the end of 3Q 2021, there will be three Internet banks in Korea and we think that there could be two more Internet banks by the end of 2022. 
In order to compete more effectively against the major fintech companies such as Kakao Bank, the major commercial banks are likely to expand aggressively into non-finance related services such as food and parcel deliveries. A key reason for this is to improve their Big Data capabilities, especially in terms of better understanding their customers' purchase patterns. 
Although we have a Positive rating on the Kakao Bank IPO, the additional competitive threats will likely to slow down the sales and profit growth of Kakao Bank considerably, especially starting 2022. Our bullish thesis on Kakao Bank rests on the relative attractive valuation of the IPO pricing. 


Kakao Bank - Forcing Traditional Competing Banks to Make Big Digital Transformations

<div><div><h2>Offering size</h2></div></div><div>
<p>Kakao Pay offers 17M shares, which account for 15% of the pre-IPO total shares, of which 55-75% are allocated to institutions.</p>
<div class="content-highlight">
<p><strong>Who is Kakao Pay?</strong></p>
<p>Launched on September 5, 2014, it is a remittance and payment service simply by entering your password after registering your credit and debit card information in KakaoTalk.</p>
<p><iframe src="https://www.youtube.com/embed/vjhmJaeI5ZI" width="640" height="360" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="allowfullscreen"></iframe></p>
</div>
</div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Offering size"}'>Offering size</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}' data-sheets-formula="=R[-45]C[0]">Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"377300"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-45]C[0]">377300</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Bourse"}' data-sheets-formula="=R[-45]C[0]">Bourse</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"KOSPI"}' data-sheets-numberformat='{"1":2,"2":"[$₩-412]#,##0","3":1}' data-sheets-formula="=R[-45]C[0]">KOSPI</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Offering"}'><strong>Offering</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":17000000}' data-sheets-numberformat='{"1":2,"2":"#,##0","3":1}' data-sheets-formula="=R[-42]C[0]"><strong>17,000,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"- % of pre-IPO SO"}'><strong>- % of pre-IPO SO</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.14995528906638497}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-40]C[0]"><strong>15.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Institutional allotment"}'><strong>Institutional allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"55.00~75.00%"}'><strong>55.00~75.00%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><h2>Split</h2><p>This is a 100% primary offering. As a result, this offering will see a capital increase rate of 15% with a shareholding dilution of 13.04%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.</p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Split"}'>Split</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Primary %"}'><strong>Primary %</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-42]C[0]"><strong>100.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Secondary %"}'>Secondary %</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-41]C[0]">0.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Capital increase rate"}'><strong>Capital increase rate</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.14995528906638497}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-39]C[0]"><strong>15.00%</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Dilution"}'><strong>Dilution</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.13040097340491325}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}' data-sheets-formula="=R[-39]C[0]"><strong>13.04%</strong></td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><div><div><h2>Schedule</h2></div></div><div>
<p>The book opens on July 29 (for both local and overseas investors) and runs for two days until July 30. The allotment will be on August 2 as finalizing the offering price. We have the subscription on August 4.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="200">
</colgroup>
<tbody>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Schedule"}'>Schedule</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book open"}'><strong>Book open</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44406}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 7. 29</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Book close"}'>Book close</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44407}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 7. 30</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Allotment"}'><strong>Allotment</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44410}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 8. 2</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Subscription"}'><strong>Subscription</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44412}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'><strong>2021. 8. 4</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Payment"}'>Payment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44417}' data-sheets-numberformat='{"1":5,"2":"yyyy. m. d","3":1}'>2021. 8. 9</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'>Listing</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"TBA"}'>TBA</td>
</tr>
<tr><td colspan="2" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div><div><div><h2>Pricing</h2></div></div><div>
<p>Kakao Pay used the relative value calculation through the growth-adjusted EV/Sales evaluation method. And the valuation peer group includes Paypal, Square, and PagSeguro Digital.</p>
<table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Valuation peers: Growth-adjusted EV/Sale"}'>Valuation peers: Growth-adjusted EV/Sale</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Paypal Holdings Inc"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Paypal Holdings Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Square Inc"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>Square Inc</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"PagSeguro Digital Ltd"}' data-sheets-formula='=googlefinance(R[1]C[0], "name")'>PagSeguro Digital Ltd</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Ticker"}'>Ticker</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"PYPL"}' data-sheets-formula='="PYPL"'>PYPL</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"SQ"}' data-sheets-formula='="SQ"'>SQ</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"PAGS"}' data-sheets-formula='="PAGS"'>PAGS</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":315.369}' data-sheets-numberformat='{"1":2,"2":"$#,##0.0B","3":1}'>$315.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":102.447}' data-sheets-numberformat='{"1":2,"2":"$#,##0.0B","3":1}'>$102.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":16.865}' data-sheets-numberformat='{"1":2,"2":"$#,##0.0B","3":1}'>$16.9B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Annualized sales based on 1Q21 sales"}'>Annualized sales based on 1Q21 sales</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":24.132}' data-sheets-numberformat='{"1":2,"2":"$#,##0.0B","3":1}'>$24.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":20.229}' data-sheets-numberformat='{"1":2,"2":"$#,##0.0B","3":1}'>$20.2B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1.511}' data-sheets-numberformat='{"1":2,"2":"$#,##0.0B","3":1}'>$1.5B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"EV/Sales multiple"}'>EV/Sales multiple</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":13.068498259572353}' data-sheets-numberformat='{"1":2,"2":"0.00x"}'>13.07x</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5.064363043155866}' data-sheets-numberformat='{"1":2,"2":"0.00x"}'>5.06x</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":11.161482461945731}' data-sheets-numberformat='{"1":2,"2":"0.00x"}'>11.16x</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Sales growth rate"}'>Sales growth rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.16}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>16.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.83}' data-sheets-numberformat='[null,3,"0.00%",1]'>83.00%</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.24}' data-sheets-numberformat='[null,3,"0.00%",1]'>24.00%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Growth rate adjustment coefficient (EV/Sales multiple / Sales growth rate)"}'><strong>Growth rate adjustment factor (EV/Sales multiple ÷ Sales growth rate)</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":81.6781141223272}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>81.68x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":6.101642220669718}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>6.10x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":46.50617692477388}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=R[-2]C[0]/R[-1]C[0]"><strong>46.51x</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Average"}'><strong>Average</strong></td>
<td colspan="3" rowspan="1" style="text-align: center;" data-sheets-value='{"1":3,"3":44.7619777559236}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=average(R[-1]C[0]:R[-1]C[2])"><strong>44.76x</strong></td>
</tr>
<tr><td colspan="4" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>
</div><div><div>This valuation is a bit difficult. Growth-adjusted EV/Sales is calculated by applying Kakao Pay's 1Q21 based annualized sales to the growth-adjusted EV/Sales multiple, reflecting the growth rate adjustment factor.</div></div><div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Kakao Pay: Growth-adjusted EV/Sale"}'>Kakao Pay: Growth-adjusted EV/Sale</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Sales growth rate"}'>Sales growth rate</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.834}' data-sheets-numberformat='{"1":3,"2":"0.00%","3":1}'>83.40%</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"A"}'>A</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Growth rate adjustment coefficient (EV/Sales multiple / Sales growth rate)"}'>Growth rate adjustment factor (EV/Sales multiple <strong>÷</strong> Sales growth rate)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44.7619777559236}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=R[-5]C[0]">44.76x</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Growth-adjusted EV/Sales multiple"}'>Growth-adjusted EV/Sales multiple</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":37.33148944844028}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=R[-1]C[0]*R[-2]C[0]">37.33x</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"C = A X B"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>C = A X B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Annualized sales based on 1Q21 sales"}'>Annualized sales based on 1Q21 sales</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":428.575}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩428.6B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>D</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Enterprise value (EV)"}'>Enterprise value (EV)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15971.899}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>₩15,971.9B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"E = C X D"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>E = C X D</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Net debt"}'>Net debt</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":-647.284}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>-₩647.3B</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>F</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Market cap"}'><strong>Market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":16619.183}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-2]C[0]-R[-1]C[0]"><strong>₩16,619.2B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"G = E - F"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>G = E - F</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Number of diluted shares after IPO"}'>Number of diluted shares after IPO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":135880810}' data-sheets-numberformat='[null,2,"#,##0",1]'>135,880,810</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"H"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'>H</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price per share"}'><strong>Price per share</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":122307.0645516464}' data-sheets-numberformat='[null,4,"[$₩]#,##0",1]' data-sheets-formula="=R[-2]C[0]*1000000000/R[-1]C[0]"><strong>₩122,307</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"I = G / H"}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]'><strong>I = G / H</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div><div><div><div>A 21.51~48.49% discount sets up an indicative price band of ₩63,000~96,000, suggesting a market cap of ₩8.21~12.52T.</div></div></div><div><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Indicative price band"}'>Indicative price band</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'><strong>Price</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":63000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩63,000</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":96000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'><strong>₩96,000</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Base deal size"}'>Base deal size</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1071}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩1,071.0B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":1632}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R8C2/1000000000">₩1,632.0B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Institutional allotment"}'>- Institutional allotment</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":589.0500000000001}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩589.1B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":897.6}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-1]C[0]*Terms!R12C2">₩897.6B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'><strong>Implied market cap</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":8213.128875}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*130367125/1000000000"><strong>₩8,213.1B</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":12515.244}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*130367125/1000000000"><strong>₩12,515.2B</strong></td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":" - Discount"}'><strong>- Discount</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.48490301659233187}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R20C2-R[-4]C[0])/R20C2"><strong>48.49%</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.21509031099783904}' data-sheets-numberformat='[null,3,"0.00%",1]' data-sheets-formula="=(R20C2-R[-4]C[0])/R20C2"><strong>21.51%</strong></td>
</tr>
<tr><td colspan="3" rowspan="1" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table></div><div><div><div></div></div></div>

Offering size
Kakao Pay offers 17M shares, which account for 15% of the pre-IPO total shares, of which 55-75% are allocated to institutions.

Who is Kakao Pay?
Launched on September 5, 2014, it is a remittance and payment service simply by entering your password after registering your credit and debit card information in KakaoTalk.








Offering size

Ticker
377300


Bourse
KOSPI


Offering
17,000,000


- % of pre-IPO SO
15.00%


Institutional allotment
55.00~75.00%

Source: DART

SplitThis is a 100% primary offering. As a result, this offering will see a capital increase rate of 15% with a shareholding dilution of 13.04%. This IPO is free of any additional options: cornerstone, clawback, or greenshoe.





Split

Primary %
100.00%


Secondary %
0.00%


Capital increase rate
15.00%


Dilution
13.04%

Source: DART

Schedule
The book opens on July 29 (for both local and overseas investors) and runs for two days until July 30. The allotment will be on August 2 as finalizing the offering price. We have the subscription on August 4.






Schedule

Book open
2021. 7. 29


Book close
2021. 7. 30


Allotment
2021. 8. 2


Subscription
2021. 8. 4


Payment
2021. 8. 9


Listing
TBA

Source: DART


Pricing
Kakao Pay used the relative value calculation through the growth-adjusted EV/Sales evaluation method. And the valuation peer group includes Paypal, Square, and PagSeguro Digital.









Valuation peers: Growth-adjusted EV/Sale
Paypal Holdings Inc
Square Inc
PagSeguro Digital Ltd


Ticker
PYPL
SQ
PAGS


Enterprise value (EV)
$315.4B
$102.4B
$16.9B


Annualized sales based on 1Q21 sales
$24.1B
$20.2B
$1.5B


EV/Sales multiple
13.07x
5.06x
11.16x


Sales growth rate
16.00%
83.00%
24.00%


Growth rate adjustment factor (EV/Sales multiple ÷ Sales growth rate)
81.68x
6.10x
46.51x


Average
44.76x

Source: DART


This valuation is a bit difficult. Growth-adjusted EV/Sales is calculated by applying Kakao Pay's 1Q21 based annualized sales to the growth-adjusted EV/Sales multiple, reflecting the growth rate adjustment factor.






Kakao Pay: Growth-adjusted EV/Sale

Sales growth rate
83.40%
A


Growth rate adjustment factor (EV/Sales multiple ÷ Sales growth rate)
44.76x
B


Growth-adjusted EV/Sales multiple
37.33x
C = A X B


Annualized sales based on 1Q21 sales
₩428.6B
D


Enterprise value (EV)
₩15,971.9B
E = C X D


Net debt
-₩647.3B
F


Market cap
₩16,619.2B
G = E - F


Number of diluted shares after IPO
135,880,810
H


Price per share
₩122,307
I = G / H

Source: DART

A 21.51~48.49% discount sets up an indicative price band of ₩63,000~96,000, suggesting a market cap of ₩8.21~12.52T.







Indicative price band
Low
High


Price
₩63,000
₩96,000


Base deal size
₩1,071.0B
₩1,632.0B


- Institutional allotment
₩589.1B
₩897.6B


Implied market cap
₩8,213.1B
₩12,515.2B


- Discount
48.49%
21.51%

Source: DART



Kakao Pay IPO: Offering Detail & Valuation Issues

<p>In calculating the corporate value for this listing, Kakao Bank selected PBR, the traditional method of calculating the value of financial companies.</p><p><strong>Apparently, the local street has no big disagreement about the use of PBR itself.</strong></p><p>Then, what matters is the level of the PBR multiple premium.</p><p><strong>Based on the indicative price band, Kakao Bank's PBR is 3.2-3.5x. On the other hand, the PBRs of Korea's four major financial holding companies are currently hovering between 0.4 and 0.5x.</strong></p><p><strong>That is, based on the current corporate value to net assets, Kakao Bank wants to receive a 7 to 8 times higher premium than Korea's major commercial banks.</strong></p><table class="table table-striped">
<colgroup>
<col width="200">
<col width="150">
<col width="150">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"Indicative price band"}'>Indicative price band</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Low"}'>Low</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"High"}'>High</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Price"}'>Price</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":33000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩33,000</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":39000}' data-sheets-numberformat='[null,2,"[$₩-412]#,##0",1]'>₩39,000</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Implied market cap"}'>Implied market cap</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":15766.510221}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*R14C2/1000000000">₩15,766.5B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":18633.148443}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-3]C[0]*R14C2/1000000000">₩18,633.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Equity, including capital inflow from IPO"}'>Equity, including capital inflow from IPO</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5009.4}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-13]C[0]+R[-12]C[0]">₩5,009.4B</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":5402.05}' data-sheets-numberformat='[null,2,"₩#,##0.0B",1]' data-sheets-formula="=R[-13]C[-1]+(Terms!R[-15]C[-1]*R[-5]C[0])/1000000000">₩5,402.1B</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"PBR"}'><strong>PBR</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3.1473849604743087}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=R[-3]C[0]/R[-1]C[0]"><strong>3.15x</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":3.449273598541294}' data-sheets-numberformat='{"1":2,"2":"0.00x"}' data-sheets-formula="=R[-3]C[0]/R[-1]C[0]"><strong>3.45x</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table><p>The valuation that converts the future value into present value at a time when growth is expected to stagnate still holds a significant premium.</p><p><strong>Kakao Bank's total deposits estimated as of 2025, when high growth will likely come to an end, are around ₩100T. Applying KB Financial's current multiple of 0.06 times the total deposits puts Kakao Bank's value in 2025 at ₩6T. Converted to the present value, the present value becomes ₩4.3T, suggesting a 3.7 to 4.3x premium to KB Financial.</strong></p>

In calculating the corporate value for this listing, Kakao Bank selected PBR, the traditional method of calculating the value of financial companies.Apparently, the local street has no big disagreement about the use of PBR itself.Then, what matters is the level of the PBR multiple premium.Based on the indicative price band, Kakao Bank's PBR is 3.2-3.5x. On the other hand, the PBRs of Korea's four major financial holding companies are currently hovering between 0.4 and 0.5x.That is, based on the current corporate value to net assets, Kakao Bank wants to receive a 7 to 8 times higher premium than Korea's major commercial banks.







Indicative price band
Low
High


Price
₩33,000
₩39,000


Implied market cap
₩15,766.5B
₩18,633.1B


Equity, including capital inflow from IPO
₩5,009.4B
₩5,402.1B


PBR
3.15x
3.45x

Source: DART

The valuation that converts the future value into present value at a time when growth is expected to stagnate still holds a significant premium.Kakao Bank's total deposits estimated as of 2025, when high growth will likely come to an end, are around ₩100T. Applying KB Financial's current multiple of 0.06 times the total deposits puts Kakao Bank's value in 2025 at ₩6T. Converted to the present value, the present value becomes ₩4.3T, suggesting a 3.7 to 4.3x premium to KB Financial.

Kakao Bank IPO: Valuation Peer Group Issues & Local Street's General View on Valuation Level

South Korea

Kakao Corp. provides Internet portal services such as news, free e-mail, and leisure information.  The Company also offers cross-platform mobile messaging application that allows users to exchange messages.

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Kakao Corp (035720 KS)

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