Kakao Corp. spin-off draws comparisons to SK Square; the key question is whether it can find a 'second SK hynix'

[Financial News] Kakao Corp.'s spin-off has brought renewed attention to the case of SK Square, which was spun off from SK Telecom. As SK Square boosted its corporate value on the back of rising equity value in SK hynix and shareholder returns, attention is now turning to whether Kakao Corp. can also reduce its conglomerate discount by separating its KakaoTalk and AI businesses from its investment function.
Kakao Corp. announced on the 21st that it will split into Kakao AI, the new company in charge of KakaoTalk and artificial intelligence, and Kakao X, the surviving company responsible for affiliate investment and management. 
The main reason behind Kakao Corp.'s push for a spin-off is its undervalued corporate worth. For years, critics have argued that the company has not been fully recognized because its KakaoTalk platform and financial, content, and mobility affiliates are all bundled together in one company.
This month, domestic and overseas securities firms estimated the Kakao Group's potential value at an average of 34.2 trillion won using the sum-of-the-parts (SOTP) method. That is 17.4 trillion won higher than its average market capitalization of 16.8 trillion won over the past three months. In other words, the market is valuing the company at only about half of the total worth of its businesses.
Kakao Corp. hopes that separating its core businesses from its investment function and strengthening shareholder returns will lead to a re-rating of its corporate value. 
Kakao Corp.'s latest spin-off is similar in both background and purpose to SK Telecom's 2021 spin-off of SK Square. At the time, SK Telecom separated its telecom and AI businesses from its semiconductor and ICT investment operations after the value of its SK hynix stake and other chip assets was overshadowed by its telecom-centered business structure.
SK Square, which inherited a 20.07% stake in SK hynix, has bought back and canceled more than 100 billion won worth of treasury shares every year since 2023. It has also streamlined its portfolio by selling stakes in non-core subsidiaries such as ONE store and Incross. As a result, its shareholder return rate relative to dividend income rose to 30.7% in 2023, 56.5% in 2024, and 56.6% in 2025.
As SK hynix's stock surged this year amid a boom in the AI memory industry, SK Square's market capitalization reached about 147 trillion won as of the close on the 13th, up sixfold from about 24 trillion won at the end of the second quarter last year. Its ranking in the KOSPI also climbed from 23rd to third. The net asset value (NAV) discount, which shows the gap between the value of held assets and market capitalization, also narrowed from 50% to 38% over the same period. 
Kakao Corp. is also seen as aiming to revalue the new Kakao AI company, which combines KakaoTalk, currently its cash cow, with its future-focused AI business, while improving operational efficiency through a restructuring of its governance structure.
Kakao AI has set a goal of securing more than 20 million daily active users (DAU) for its AI services by 2030 and increasing platform dwell time by more than 50%. It plans to expand revenue models such as AI advertising, agentic commerce, and subscriptions, achieve average annual revenue growth of around 20% by 2030, and lift total revenue to more than 6 trillion won. AI-related revenue is targeted to exceed 1 trillion won by 2030.
Kakao X, the investment-focused company, is reviewing virtual assets, physical AI, and global fandom as new business candidates. It plans to use about 230 billion won raised through the monetization of held assets and about 410 billion won in resources held by subsidiaries. Its goal is to build a revenue base of more than 10 trillion won by growing major business sales at an average annual rate of 13.3% through 2030.
It has also drawn up a separate shareholder return policy. Kakao AI will use 20% to 35% of its adjusted free cash flow for shareholder returns. Kakao X will allocate 30% each of subsidiary dividends and investment gains to shareholder returns. Kakao Corp. also plans to buy back and cancel 300 billion won worth of treasury shares using proceeds from the sale of Dunamu Inc.
However, unlike SK Square's SK hynix, Kakao X does not have a single core asset that accounts for most of its net asset value and has a clearly established market price. Its portfolio is spread across finance, content, and mobility, and it also holds a number of unlisted companies, making it uncertain whether a spin-off alone will quickly narrow the discount. Ultimately, Kakao Corp.'s revaluation is expected to depend on whether Kakao AI's monetization, the discovery of new growth engines, and sustained shareholder returns translate into real results.
[email protected] Choi Hye-rim Reporter