KONA I Co., Ltd. expects earnings to improve as local currency programs expand and metal cards grow

[Financial News] NH Investment & Securities said on the 8th that it expects KONA I Co., Ltd.'s earnings improvement to continue, supported by an expanded budget for local currency programs and increased supplies of metal cards in North America. It did not provide an investment rating or a target price.
Kang Gyeong-geun, an analyst at NH Investment & Securities, said KONA I Co., Ltd. is expected to benefit from a favorable policy environment, based on its established position in the card-based local currency market. KONA I Co., Ltd. has a 73% share of that market, with 15 million cumulative members and cumulative payment volume of 70 trillion won.
According to the report, central government funding in the 2027 budget proposal to support the issuance of local love gift certificates totaled 1.45 trillion won, up 26.1% from this year. The issuance volume is 25.6 trillion won and, under the government’s basic plan, is expected to expand to 31.2 trillion won by 2030.
“A substantial portion of the fixed costs needed to develop the platform and secure staff has already been determined, so increases in payment volume translate into higher profits,” Kang said. He explained, “Last year, KONA I Co., Ltd.’s payment volume for local currency transactions was 12.4 trillion won, and revenue from transaction fees was 55.2 billion won. Applying a fee rate of about 0.45%, every 1 trillion won increase in payment volume adds about 4.5 billion won in fee revenue.”
In the smart card division, high-margin metal cards were cited as a growth driver. KONA I Co., Ltd. is the world’s second-largest metal card operator, with a 12.1% share of the global market by units sold. It is expanding its share of supplies to key customer American Express, while increased supplies to JPMorgan Chase & Co., its largest source of demand, were also cited as a medium- to long-term growth factor.
“We estimate metal card operating margins to be in the low-to-mid 30% range and expect the growing share of high-margin products in sales to improve company-wide profitability,” Kang said. “KONA I Co., Ltd. is also expanding its Jincheon plant to increase annual metal card production capacity from about 10 million to 15 million cards.”
The report also highlighted the potential for new businesses stemming from stablecoin legislation. KONA I Co., Ltd. is pursuing issuance agency services and platform operations by leveraging its existing member base, local government payment networks, and infrastructure for card issuance, authorization and settlement. Kang added, “If a legal framework is established, revenue opportunities from payment fees and agency fees for issuance and operation could expand,” while noting that “the specific revenue model is expected to be finalized based on the direction of future regulation.”
[email protected] Choi Doo-sun Reporter