이 기사는 2021년 07월 07일 07시41분 thebell에 표출된 기사입니다

Kakao Pay, the payment services unit of mobile giant Kakao, has decided to value itself on a growth-adjusted enterprise value (EV)/sales basis for its planned initial public offering (IPO).

This methid calcuates an EV as a revenue multiplied by an adjusted sales growth rate, which is defined as a long-term sales growth rate multipled by the average of peers' EV/sales to growth ratios.

Kakao Pay has set its target valuation at 16.62 trillion won ($14.68 billion) before applying a discount rate in its prospectus, based on this method, industry sources said Monday.

The company calucated its EV based on its sales growth rate for 2021 (annualized based on the results in the first quarter) compared to 2018.

The calculation is mainly based on an EV/sales method, which is widely used by loss-making companies, but reflected a difference in growth rates between Kakao Pay, which is in its early stage, and peer companies in the later stage so that the figure takes into account the Kakao Pay's future value when its business gains steam.

Kakao Pay and its underwriters have selected PayPal Holdings, Square, and PagSeguro Digital as its comparable companies. The peer group includes a company which generates more than 30% of its sales from payment services and a company which operates business to consumer (B2C) financial platform services.

The three peer companies are in their later stages, with more than 10 years of history. Square and PagSeguro Digital recorded net profits of more than 250 billion won last year and PayPal posted a net profit of nearly 5 trillion won.

The peer companies have an average EV/sales multiple of 9.8 times. However, given that the companies’ sales growth rate was 16% (Paypal), 83% (Square), and 24% (PagSeguro), respectively, the average adjusted EV/sales multiple has been calculated to be 44.7 times. The final growth-adjusted EV/sales multiple, considering Kakao Pay's 83.4% sales growth rate, comes to 37.3 times.

As Kakao Pay is the first financial platform company to be listed on the domestic stock market, this method of calculating a corporate value is highly likely to be used as a reference for future listings of financial platform companies.

This method, however, is still unfamiliar in the domestic market, with Samsung Biologics using it when it valued itself in its listing in 2016.

Unlike Krafton and KakaoBank, which stirred controversy over an adequacy of comparable companies, Kakao Pay is drawing attention for its calculation method itself.

Market insiders widely said the firm’s valuation has to be left to the market’s evaluation as it is a first for a domestic loss-making platform company to be listed on the main Kospi bourse. (Reporting by Suk-cheol Choi)