Global investment bank (IB) JPMorgan assessed that market expectations regarding KakaoBank's new business are excessive. The reason was that it will take years before generating revenue.
On the 23rd, according to the financial investment industry, JPMorgan downgraded its investment opinion on KakaoBank from neutral to 'underweight.' The target stock price remains at 23,000 won, which is 28.3% lower (9,050 won) than the closing price on the 20th (32,050 won). JPMorgan previously also downgraded its investment opinion on Kakao Pay, noting that market expectations were excessive.
JPMorgan pointed to the Thai government's approval of virtual bank licenses and the promotion of won-based stablecoin projects as the background for KakaoBank's stock price jumping over 14% in just one day on the 20th. It is a favorable development, but JPMorgan explains that the stock price increase is excessive.
First, KakaoBank formed a consortium with Thai financial holding SCBX to obtain a virtual bank license from the Thai government. It plans to launch full-scale services starting in the second half of 2026. JPMorgan noted, 'KakaoBank is the second-largest shareholder in terms of equity, and as a foreign entity in Thailand, its actual contribution is limited,' adding that 'since it is expected to take a long time to realize revenue, market reactions are excessive.'
JPMorgan pointed out that while the new government is actively supportive of introducing won-based stablecoins, there is currently no institutional foundation or roadmap. This suggests that it is premature to assign valuations related to stablecoins to KakaoBank.
JPMorgan particularly highlighted that while KakaoBank's return on equity (ROE) is lower than that of KB Financial Group, Shinhan Financial Group, and Hana Financial Group, its price-to-book ratio (PBR) is over three times higher, presenting evidence of stock price overheating. It seems the stock price surged due more to investor sentiment than corporate performance.
JPMorgan stated, 'The fundamentals of core businesses have not changed,' and 'given that valuations already reflect high expectations, we judge that there is a greater risk of downward pressure on stock prices in the short term.'