Coupang projected to exceed $50 billion after NYSE IPO

Korean e-commerce companies gained as the value of Coupang is projected to exceed $50 billion after its New York Stock Exchange IPO

Shares of Korean e-commerce companies gained as the value of the leading name, Coupang, is projected to exceed $50 billion after its New York Stock Exchange IPO.

Shares of Naver Corp. and Kakao Corp. hit fresh highs on Tuesday, going past 400,000 won ($360) and 500,000 won, respectively, during the session. On Wednesday, Naver finished 0.5 percent down at 392,000 won and Kakao fell 0.97 percent to 509,000 won.

The two big-tech aspirants have been enjoying the tech boom since last year as consumers and businesses turn to online platforms during the Covid pandemic. 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 valued 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 rise to 83.7 trillion won and that of 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.

E-commerce business of Kakao which runs on mobile chat app, Kakao Talk, and used by nearly all Koreans, is forecast to see strong growth.

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.

On Wednesday, the stock ended 1.3 percent down at 186,500 won. It finished 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.