Kyungrinara to Drive Further Growth in 2022

The authors are analysts of Shinhan Investment Corp. They can be reached at hsh0628@shinhan.com and wonyong.sim@shinhan.com, respectively, -- Ed.

 

Unrivalled B2B banking platform in the domestic market

Webcash reported operating profit of KRW4.7bn (+17.1% YoY) on sales of KRW21bn (+17.3% YoY) for 3Q21. Solid earnings were driven by: 1) steady growth of In-house Bank and Branch; and 2) rapid growth of Kyungrinara. The company offers three types of B2B banking platform solutions based on the size of the client: 1) In-house Bank for public institutions or conglomerates; 2) Branch for mid-to large-size companies; and 3) Kyungrinara for SMEs.

Webcash’s B2B solutions are linked to all financial institutions and ERP (enterprise resource planning) systems for real-time comprehensive management of client funds. Clients can complete the management of sales/purchases/receipts and money transfers through Webcash’s B2B solutions, eliminating the process of logging onto the online banking services of individual banks for each task.

Upbeat on steep growth in KT-Kyungrinara users

In July, Webcash raised KRW14.4bn from KT through a rights offering to fund efforts to secure new subscribers. KT is carrying out promotions for KT-Kyungrinara to KT affiliates and telco clients, and the newly-launched AI-Kyungrinara with voice recognition features is offered to new users for free through March 2022. We believe the number of KT-Kyungrinara users rose from 4,000 to 6,000 levels in 3Q21, with growth reaching near levels seen at the start of the service at +1,000 users per month. With the conversion of free to paid services around 1Q22, earnings from Kyungrinara should record another growth spurt going forward.

Kyungrinara to drive further growth in 2022

Key points to watch in 2022 are: 1) launch of the In-house Bank Lite version; 2) expansion of promotional efforts for Branch; and 3) switch of KT-Kyungrinara to paid services following the end of the promotion period. With operating leverage effect to increase alongside growth in users, we expect Webcash’s operating margin to continue steadily upwards (7.6% in 2018 →15.2% in 2019 →19.6% in 2020 →21.0% in 2021 →23.7% in 2022 →26.0% in 2023). For full-year 2021, sales are projected at KRW82.3bn (+13.0% YoY) and operating profit at KRW17.3bn (+21.0% YoY).

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