This undated file photo provided by Kakao Pay Corp. shows its headquarters in Pangyo, south of Seoul.
SEOUL, Feb. 14 (Korea Bizwire) — Kakao Pay Corp., the online payment unit of South Korean tech giant Kakao Corp., is expected to see its earnings and share price decline due to Apple Pay’s debut in the country.
DB Financial Investment last week downgraded shares of Kakao Pay from “buy” rating to “hold.”
Considering that domestic brokerage houses rarely give “sell” ratings, DB’s latest decision can be interpreted as a recommendation to sell.
“It’s extremely likely that Kakao Pay will be impacted by the debut of Apple Pay,” said Jeong Kwang-myung, a researcher at DB Financial Investment.
In particular, there is worry about a possible deterioration of profitability in Kakao Pay’s financial services business, including credit loans.
Kakao Pay’s financial services business recorded revenue of 15.7 billion won (US$12.3 million) in the fourth quarter of last year, down 52.3 percent from a year earlier and 58 percent from the previous quarter.
With deeper competition in the mobile payment service market, the operational environment is likely to deteriorate.
“Kakao Pay’s credit loan growth will likely remain low this year due to regulations on interest rates and loans,” said Jeong Ho-yoon, an analyst at Korea Investment & Securities.
Shares in Kakao Pay closed at 59,200 won on Monday, down about 20 percent from a month ago.
J. S. Shin (js_shin@koreabizwire.com)
