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Analysts upbeat on Kakao; battery sector outlook gloomy

By Choi Ji-won

Published : Feb. 4, 2024 - 16:44

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Kakao's logo is seen at the company's Pangyo headquarters in Seongnam, Gyeonggi Province. (Im Se-jun/The Korea Herald) Kakao's logo is seen at the company's Pangyo headquarters in Seongnam, Gyeonggi Province. (Im Se-jun/The Korea Herald)

Despite lingering management risks, tech giant Kakao may see a surprise increase in its stock price this year, with analysts bullish on its advertising and commerce businesses.

According to market intelligence firm FnGuide, Kakao's target price, provided by more than three analysts, was 69,458 won ($51.90) as of Sunday, up 10.6 percent from 62,783 won recorded at the end of last year, marking the highest increase rate among the target prices of the top 20 firms listed on the Korean stock market.

Analyst Yoon Ye-ji of Hi Investment & Securities, who recently raised Kakao's target price at 70,000 won, projected the company to post an operating profit of 619 billion won this year, up 29 percent from the previous year.

She explained the potential for a rebound in the advertising and commerce industries, following interest rate cuts, along with the continued surplus of its subsidiary Kakao Entertainment, as key factors leading to the price surge.

SK Hynix secured the second position, with its target price consensus among local analysts increasing by 6.9 percent in the past month, climbing from 156,955 won to 167,913 won, reflecting expectations of improved performance amid the recovery of the semiconductors industry.

Meritz Financial Group's target price consensus saw the third-highest hike this year at 5.4 percent, leading the recent rally by the local financial industry on the stock market. The gains in banking and financial stocks followed the local authorities' announcement of a "value-up" program to boost underperforming stocks in the market.

The stock prices of Shinhan Financial Group and Hana Financial Group, two of South Korea's largest financial firms in terms of market capitalization, also had their target prices significantly raised in the recent month.

Alongside SK hynix, Samsung Electronics had its target price raised to 94,217 won at the end of January from 91,917 won a month ago. The 2.5 percent surge marked the fourth-highest rate hike, following that of Meritz Financial.

Due to concerns of a slowdown in electric vehicles, the target stock prices for secondary battery manufacturers were adjusted downward overall during the same period.

Recording the biggest fall among the top 20 companies in the market was Samsung SDI, which saw its target price consensus drop 17.1 percent from 742,273 won to 614,762 won in the past month.

Another major battery maker, LG Energy Solution, saw its target price slashed by 12.8 percent, while battery materials manufacturers Posco Future M and LG Chem logged target price cuts of 9 percent and 7.3 percent, respectively, in the same period.