Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

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Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Equity Capital Markets

In this insight, we provide an updated valuation analysis of <a href="https://www.smartkarma.com/entities/kakao-pay-corp" target="_blank" data-smartkarma-citation="entities:29675:1" rel="noopener">Kakao Pay (377300 KS)</a>. We update our financials to account for the company's 1H 2021 results. In addition, we have used the updated financials comparisons of the comps.<div class="content-highlight">Our base case valuation of Kakao Pay is an implied market cap of 11.1 trillion won or 81,829 won per share. Our base case valuation of the company is reduced by 9% mainly due to lower sales estimates in 2022 combined with lower valuation multiple (EV/S of 10x in 2022 versus 10.6x previously). <ul style="list-style-type: disc;"><li>Our base case valuation is based on 10.0x EV/Sales multiple and applying this to our estimated sales of 919 billion won in 2022. </li><li>The EV/S multiple of 10.0x is based on the median valuation multiple of the comps in 2022. Among the comps, the valuation multiple of Upstart Holdings has increased materially in the past two months, which was offset by lower valuation multiples of 360 Digitech and Lemonade.</li></ul>The IPO price range is from 60,000 won to 90,000 won. If the IPO is priced near the mid to high end of the IPO price range, we would avoid this deal. On the other hand, if the IPO is priced close to the low end of the IPO price range, we would be more comfortable with taking the deal.Furthermore, although our one year base case valuation is 81,829 won per share, we do think there could be moderate (but not excessive) pop in the first 1-2 days of trading rising to as high as 103,366 won per share. We believe that many investors may opt to take some profits if the stock pops to more than 100,000 won per share. </div>

In this insight, we provide an updated valuation analysis of Kakao Pay (377300 KS). We update our financials to account for the company's 1H 2021 results. In addition, we have used the updated financials comparisons of the comps.Our base case valuation of Kakao Pay is an implied market cap of 11.1 trillion won or 81,829 won per share. Our base case valuation of the company is reduced by 9% mainly due to lower sales estimates in 2022 combined with lower valuation multiple (EV/S of 10x in 2022 versus 10.6x previously). Our base case valuation is based on 10.0x EV/Sales multiple and applying this to our estimated sales of 919 billion won in 2022. The EV/S multiple of 10.0x is based on the median valuation multiple of the comps in 2022. Among the comps, the valuation multiple of Upstart Holdings has increased materially in the past two months, which was offset by lower valuation multiples of 360 Digitech and Lemonade.The IPO price range is from 60,000 won to 90,000 won. If the IPO is priced near the mid to high end of the IPO price range, we would avoid this deal. On the other hand, if the IPO is priced close to the low end of the IPO price range, we would be more comfortable with taking the deal.Furthermore, although our one year base case valuation is 81,829 won per share, we do think there could be moderate (but not excessive) pop in the first 1-2 days of trading rising to as high as 103,366 won per share. We believe that many investors may opt to take some profits if the stock pops to more than 100,000 won per share. 

Kakao Pay - Slightly Lower Our Base Case Valuation

Kakaopay

Kakao Pay - Slightly Lower Our Base Case Valuation