Kakao Bank shares nosedive to below IPO price on first sell opinion since listing

[Photo by MK DB]

Shares of South Korea’s internet-only bank Kakao Bank are losing more ground, falling under last year’s IPO price of 39,000 won, on a bleak outlook by a domestic security firm that gave the company the first “sell” opinion since the stock started trading from early August last year.

DB Financial Investment lowered the company’s stock price target to 24,600 won ($18.96) and gave a sell opinion on Wednesday. In a report, the brokerage stated that Kakao Bank’s earnings growth was becoming stagnated after it came under the same regulations as traditional lenders.

Kakao Bank’s loan growth rate was estimated in the 15 percent range, less than last year’s 27.3 percent.

“While there is a possibility that it can increase its profits as a platform company with its 18.61 million customers, it won’t be easy to find new profit sources as long as it falls under the same regulations as traditional banks,” said Lee Byung-gun, a DB Financial Investment analyst.

According to FnGuide, Kakao Bank was the first to receive a sell opinion from DB Financial Investment this year.

Kakao Bank shares plunged due to the massive 41 billion won worth of sell-offs by foreign and institutional investors on Wednesday following the release of the report, closing 7.85 percent down at 31,100 won. Kakao Bank continued the downwards trajectory on Thursday, losing 1.29 percent to 30,700 won.

The bank stock has seen its shares fall 47 percent this year and is refreshing 52-week lows each day. Compared to its peak of 94,400 won August last year, it has fallen a whopping 67 percent.

Other financial institutions so far have maintained a “buy” opinion and have set Kakao Bank’s stock price target in the 47,000 to 63,000 range on expectations that its profits will increase regardless of its sluggish growth rate.

Hana Financial Investment estimated that Kakao Bank’s net profit will reach 305.2 billion won this year and enlarge to 575 billion won in 2025.

[ㄏ Maeil Business Newspaper & mk.co.kr, All rights reserved]