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.

Equity Capital Markets

<p>It has been reported that Kakao Pay is considering delaying its listing to September. This is because of the 135-day rule that a company undergoing an IPO must complete the listing procedure within 135 days from the date of preparation of the financial statements.</p><div class="content-highlight"><p><strong>According to this regulation, Kakao Pay must complete the listing within August 13, 135 days from the date of the 1Q21 financial statements.</strong></p></div><hr><h2>What is the 135-day rule?</h2><p><strong>The 135-day rule is a rule on the expiration date of accounting settlement data reflected in the IPO prospectus and the securities declarations for overseas investors.</strong></p><p>The important point here is that KRX does not have any rule similar to the 135 rule.</p><p>On the other hand, the US Securities and Exchange Commission stipulates that all listing schedules, including payment, be completed within 135 days from the time the financial statements stated in the IPO prospectus are prepared.</p><p><strong>So why should Kakao Pay care about the 135-day rule?</strong></p><div class="content-highlight"><p><strong>This rule does not apply to domestic investors, but it inevitably applies when a newly listed company with a large IPO size needs to raise funds abroad that are within the jurisdiction of the SEC.</strong></p></div><h2>When is the deadline for the initial IPO prospectus?</h2><p>If listing proceeds based on the financial statements at the end of the first quarter, March 31 will become the base date. So, the last business day of the 135-day rule will be <strong>August 13</strong>.</p><div class="content-highlight"><p><strong>For this reason, Kakao Pay's listing date was set for August 12, despite concerns about overlapping demand with Kakao Bank.</strong></p></div><p>That is, August 12, the scheduled listing date of Kakao Pay, was a really tight schedule. Therefore, the fact that the Financial Supervisory Service requested a revised report was risking that the listing schedule would be significantly pushed back.</p><h2>How long will the schedule be delayed?</h2><p>In the end, the 135-day rule was not met based on the 1Q financial statements, so the IPO prospectus has to be rewritten based on the 2nd quarter financial statements.</p><p><strong>This means that the IPO schedule has to be adjusted in line with the submission of the 2Q financial report to be published in mid-August.</strong></p><div class="content-highlight"><p><strong>In this case, considering that it will take at least a month or more to complete the listing process, including the FSS review period, it is expected that the company will be listed at the end of September at the earliest. In other words, at this point, the possibility of an October listing should remain open.</strong></p></div>

It has been reported that Kakao Pay is considering delaying its listing to September. This is because of the 135-day rule that a company undergoing an IPO must complete the listing procedure within 135 days from the date of preparation of the financial statements.According to this regulation, Kakao Pay must complete the listing within August 13, 135 days from the date of the 1Q21 financial statements.What is the 135-day rule?The 135-day rule is a rule on the expiration date of accounting settlement data reflected in the IPO prospectus and the securities declarations for overseas investors.The important point here is that KRX does not have any rule similar to the 135 rule.On the other hand, the US Securities and Exchange Commission stipulates that all listing schedules, including payment, be completed within 135 days from the time the financial statements stated in the IPO prospectus are prepared.So why should Kakao Pay care about the 135-day rule?This rule does not apply to domestic investors, but it inevitably applies when a newly listed company with a large IPO size needs to raise funds abroad that are within the jurisdiction of the SEC.When is the deadline for the initial IPO prospectus?If listing proceeds based on the financial statements at the end of the first quarter, March 31 will become the base date. So, the last business day of the 135-day rule will be August 13.For this reason, Kakao Pay's listing date was set for August 12, despite concerns about overlapping demand with Kakao Bank.That is, August 12, the scheduled listing date of Kakao Pay, was a really tight schedule. Therefore, the fact that the Financial Supervisory Service requested a revised report was risking that the listing schedule would be significantly pushed back.How long will the schedule be delayed?In the end, the 135-day rule was not met based on the 1Q financial statements, so the IPO prospectus has to be rewritten based on the 2nd quarter financial statements.This means that the IPO schedule has to be adjusted in line with the submission of the 2Q financial report to be published in mid-August.In this case, considering that it will take at least a month or more to complete the listing process, including the FSS review period, it is expected that the company will be listed at the end of September at the earliest. In other words, at this point, the possibility of an October listing should remain open.

Accurate Facts About the Application of Kakao Pay's 135-Day Listing Date Rule

<p>In a regulatory filing on July 16 (later today), the Financial Supervisory Service said that it had requested Kakao Pay to revise its IPO prospectus. As a result, the IPO prospectus submitted by Kakao Pay earlier this month has been suspended.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/913/original/Screen+Shot+2021-07-16+at+10.12.05+AM.png?1626444842" class="editor-image img-responsive" data-smartkarma-image-id="218913"></figure></section><p>Kakao Pay must submit a revised report within three months, and if it is not submitted, it is considered a withdrawal of the public offering.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/914/original/Screen+Shot+2021-07-16+at+10.20.56+AM.png?1626445364" class="editor-image img-responsive" data-smartkarma-image-id="218914"></figure><div class="content-highlight"><p><a href="http://dart.fss.or.kr/dsaf001/main.do?rcpNo=20210716100004" target="_blank" rel="noopener">Here is the link to the regulatory filing. (DART)</a></p></div></section>

In a regulatory filing on July 16 (later today), the Financial Supervisory Service said that it had requested Kakao Pay to revise its IPO prospectus. As a result, the IPO prospectus submitted by Kakao Pay earlier this month has been suspended.Kakao Pay must submit a revised report within three months, and if it is not submitted, it is considered a withdrawal of the public offering.Here is the link to the regulatory filing. (DART)

Kakao Pay to Revise Offering Price: Reasons & Schedule Impacts on Kakao Bank & Krafton

<p>Kakao's two financial affiliates, Kakao Bank and Kakao Pay, are about to go public at the same time next month. As of the listing date, there is an interval of only one week.</p><table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr>
<td data-sheets-value='{"1":2,"2":"IPO schedule"}'>IPO schedule</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Kakao Bank"}'>Kakao Bank</td>
<td style="text-align: right;" data-sheets-value='{"1":2,"2":"Kakao Pay"}'>Kakao Pay</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Listing"}'><strong>Listing</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44413}' data-sheets-numberformat='{"1":5,"2":"mm. dd","3":1}'><strong>08. 05</strong></td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":44420}' data-sheets-numberformat='{"1":5,"2":"mm. dd","3":1}'><strong>08. 12</strong></td>
</tr>
<tr><td colspan="3" data-sheets-value='{"1":2,"2":"Source: DART &amp; KRX"}'>Source: DART &amp; KRX</td></tr>
</tbody>
</table><p><strong>This poses a dilemma for local institutional investors. This is because if institutions hold both at their originally allocated weight, risk exposure to a specific sector (financial industry) and a specific corporate group (Kakao Group) will suddenly increase.</strong></p><p>In fact, concerns are being raised that the business scope of Kakao Bank and Kakao Pay may overlap too much. Although their current main business is different, they are aiming for almost the same business direction to expand into a comprehensive financial platform through a medium called Kakao Talk.</p><div class="content-highlight"><ul>
<li>The symbolic point of conflict in the evolution of business areas is the MyData Project that the government is promoting. MyData is a business that provides customized financial services by collecting personal credit information scattered across banks, insurance companies, and credit card companies.</li>
<li>Kakao Bank has decided to launch its own MyData business and is preparing to apply for a license for this. Kakao Pay has already obtained a preliminary business license for MyData.</li>
</ul></div><p><strong>As such, this overlapping business area in the not-too-distant future worsens the severity of risk exposure to the same sector/corporate group.</strong></p>

Kakao's two financial affiliates, Kakao Bank and Kakao Pay, are about to go public at the same time next month. As of the listing date, there is an interval of only one week.







IPO schedule
Kakao Bank
Kakao Pay


Listing
08. 05
08. 12

Source: DART &amp; KRX

This poses a dilemma for local institutional investors. This is because if institutions hold both at their originally allocated weight, risk exposure to a specific sector (financial industry) and a specific corporate group (Kakao Group) will suddenly increase.In fact, concerns are being raised that the business scope of Kakao Bank and Kakao Pay may overlap too much. Although their current main business is different, they are aiming for almost the same business direction to expand into a comprehensive financial platform through a medium called Kakao Talk.
The symbolic point of conflict in the evolution of business areas is the MyData Project that the government is promoting. MyData is a business that provides customized financial services by collecting personal credit information scattered across banks, insurance companies, and credit card companies.
Kakao Bank has decided to launch its own MyData business and is preparing to apply for a license for this. Kakao Pay has already obtained a preliminary business license for MyData.
As such, this overlapping business area in the not-too-distant future worsens the severity of risk exposure to the same sector/corporate group.

Kakao Bank & Kakao Pay Listings in Close Proximity: Institutional Cannibalization Risk

<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



<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

South Korea

Kakao Entertainment Corp. operates as an application software development company. The Company provides online cartoons, online novels, music, and more. Kakao Entertainment conducts businesses in South Korea.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
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Kakao Entertainment (103260 KS)

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52-week Range

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