Korean e-commerce majors gain new limelight due to Coupang’s IPO plan

2021.02.17 13:23:49 | 2021.02.17 15:36:11

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Shares of red-hot Korean e-commerce majors gained more steam as the value of leader in the pack Coupang is projected to exceed $50 billion after its New York Stock Exchange IPO.

Shares of Naver Corp. and Kakao Corp. touched fresh ceilings on Tuesday, surpassing 400,000 won ($360) and 500,000 won, respectively, during the session. On Wednesday, Naver finished 0.5 percent lower at 392,000 won and Kakao down 0.97 percent at 509,000 won.

Naver is now closely chasing No. 3 LG Chem in market cap on the main Kospi, while Kakao elbowed out Celltrion to ascend to No. 8.

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The two big-tech aspirants have been enjoying the tech boom since last year amid explosive turn to online platforms through virus scare momentum. But market analysts see more room for their rise as Coupang’s upcoming IPO is expected to bring international attention to Korean players’ e-commerce capabilities and growth potential.

Local brokerage eBest Investment & Securities estimates the value of Naver’s e-commerce business at 13.5 trillion won and that of Kakao at 7.6 trillion won, based on Coupang’s valuation projection of over 55 trillion won after IPO. This means that Naver’s total enterprise value could go up to as high as 83.7 trillion won and Kakao’s to 58.5 trillion won.

“Coupang’s Wall Street IPO will set the momentum of reevaluating Naver and Kakao’s e-commerce businesses,” said Sung Jong-wha, an analyst at eBest Investment & Securities. The analyst revised the target share price of Naver upward by 11 percent to 510,000 won and that of Kakao by 10 percent to 660,000 won.

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E-commerce business of Kakao running on Kakao Talk, a mobile chat app that nearly all Koreans use, is forecast to enjoy strong growth onwards. According to Hi Investment & Securities, the number of online stores running a business via Kakao Talk is anticipated to grow by 72 percent and transaction amount by 292 percent this year.

E-mart, the country’s largest hypermarket operator, also draws attention to its future growth in online business. “E-mart’s current market cap of 5 trillion won is overly underrated when compared to Coupang’s market value,” said Park Eun-Kyung of Samsung Securities. E-mart’s value should be a minimum of 7 trillion won, which means the stock could go up to 252,000 won. On Wednesday, the stock finished 1.3 percent lower at 186,500 won. It ended the previous day at 189,000 won, the highest since January 2019.

NH Investment & Securities also presented a rosy outlook for E-mart’s e-commerce business, deeming its value at around 3 trillion won to 5 trillion won, according to analyst Lee Ji-young. E-mart also plans to triple the same-day delivery within the next five years to match Coupang’s service.

By Kim Ki-chul, Kang Bong-jin and Cho Jeehyun

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