The author is an analyst at Shinhan Investment Co., Ltd. Contact us at [email protected] -Ed.
Expected benefits of MyData, Toss Bank and Kakao Bank
NICE Information Service believes that it will continue to benefit from trickle-down from the government’s FinTech Innovation Policy. A total of 29 companies have received final approval to operate the MyData business. Currently, seven companies (including KakaoPay) have provisional licenses, and the second and third approvals are expected in the future. NICE Information Service is expected to increase sales by providing MyData operators with personal credit information. When launching Toss Bank, the company needs to secure a new distributor. The other two Internet-only banks, Kakao Bank and K Bank, are already included in our customers. Internet banking credit office (CB) service charges are billed in proportion to the total amount of data provided, so sales of KakaoBank, which is growing rapidly after an IPO, are expected to increase.
Stable profit from main business
NICE Information Service is the largest CB service provider in South Korea with a market share of 70%. Sales of personal CB services, which account for more than 60% of total sales, have increased at a CAGR of 9.4% over the past five years due to the rapid growth of banks’ personal credit loans. Strong earnings are also driven by the following factors: 1) Strong sales of B2B, which has a large leverage effect. 2) A fixed interest rate plan for banks that has the effect of raising prices.
The company recorded strong first-quarter sales growth of 7.8% year-on-year and operating profit of 28.1% year-on-year. Strong growth was partly due to the low base effect of one-time costs recorded in the first half of 2020, increased search volume of personal credit information, and improved corporate intelligence business. Sales in the second quarter of 2009 were 128 billion won (up 8.7% from the previous year), and operating income was 21.4 billion won (up 8.5% from the previous year), showing a continuous upward trend.
New big data business to boost profits and reputation
There are high expectations for new big data businesses through NICE Zini Data, a wholly owned subsidiary, as well as the main business. The domestic big data market has just begun to grow and should grow rapidly from 1.8 trillion won in 2020 to 2.6 trillion won in 2023. New businesses may help you become more competitive through: 1) Integration of non-credit and financial information; 2) B2B database consulting and analysis services. NICE Information Service generates only 8% of sales from big data business compared to 24% of overseas CB peer Experian. Increasing sales share of big data business should take valuation to a new level. We have raised the target price of NICE Information Service from 27,000 won to 33,000 won, which is highly recommended for long-term investors.