Healthy Transaction Inflow from Coupang and Wemakeprice
The author is an analyst of NH Investment & Securities. He can be reached at midas.sohn@nhqv.com. -- Ed.
In 2021, KG Mobilians should enjoy strong synergy effects from its recent merger with KG Allat. Among additional positives, we note healthy transaction inflow from Coupang and Wemakeprice, rising transaction volume from a client group’s newly-integrated employee mall, and expectations for overall growth acceleration driven by anticipated entry into the monthly payment service market.
Securing economies of scale by merging credit card and mobile PG businesses
In 2021, synergy effects from its merger with KG Allat should pick up in earnest for KG Mobilians. Having established itself as a payment gateway (PG) player with transaction value in excess of W7tn, the firm is rapidly securing cost competitiveness and minimizing financial burden. Well-positioned to operate a seamless credit card PG business, KG Mobilians looks to possess clear advantages over its competitors.
Transaction value for KG Mobilians’ credit card PG business should climb 29% and 30% y-y in 2020 and 2021, respectively. Last year, Samsung Electronics (SEC)’s employee mall started operating as an integrated mall for the entire Samsung Group from Nov 20, 2020. We expect related transaction amount to expand 55% y-y this year.
From Apr 2020, the limit on payments made through mobile payment platforms was raised from W600,000 to W1mn, allowing for the easy mobile purchase of big-ticket items such as white home appliances and airline tickets. For reference, the size of the mobile micropayment market is estimated to reach W8tn in 2021, showing y-y growth of 14%.
Expectations in play for securing of new customers and development of new markets
KG Mobilians’ launch of new businesses with Coupang on Dec 20, 2020, and Wemakeprice on Jan 21, 2021, is expected to drive overall growth moving ahead. We note that the partnership between 11th Street and Amazon has resulted in greater overseas direct purchasing on 11th Street, in turn bringing an uptick in overall transaction value for KG Mobilians. Since its merger with KG Allat, KG Mobilians’ M/S in NAVER Shopping has gradually increased as well.
KG Mobilians is working to offer monthly payment services in partnership with global insurance companies. The firm is also expected to provide credit card and mobile PG services to global OTT service providers in the future.