Webcash: Towards another growth spurt

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The authors are analysts from Shinhan Investment Corp. They can be contacted at [email protected] and [email protected], respectively, – Ed.

Unmatched B2B banking platform in the domestic market

Webcash reported operating profit of KRW4.7 billion (+ 17.1% yoy) on sales of KRW21 billion (+ 17.3% yoy) for 3Q21. Strong profits were driven by: 1) steady growth of the internal bank and branch; and 2) the rapid growth of Kyungrinara. The company offers three types of B2B banking platform solutions depending on the size of the client: 1) In-house Bank for public institutions or conglomerates; 2) Branch for medium to large sized companies; and 3) Kyungrinara for SMEs.

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

Optimistic about strong growth of KT-Kyungrinara users

In July, Webcash raised KRW 14.4 billion from KT via a rights offering to fund efforts to secure new subscribers. KT is running promotions for KT-Kyungrinara to KT affiliates and telecom customers, and the brand new AI-Kyungrinara with voice recognition features is being offered free to new users until March 2022. We believe the number of KT-Kyungrinara users increased from 4,000 to 6,000 levels in 3Q21, with growth close to the levels seen at the start of the service to +1,000 users per month. With the conversion from free to paid services around 1Q22, Kyungrinara’s earnings are expected to record a further growth spurt in the future.

Kyungrinara will boost growth in 2022

The key points to watch in 2022 are: 1) the launch of the In-house Bank Lite version; 2) expansion of promotional efforts for the branch; and 3) switch from KT-Kyungrinara to paid services after the end of the promotion period. With an increase in operational leverage alongside user growth, we expect Webcash’s operating margin to continue to grow steadily (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 the full year 2021, sales are projected at KRW82.3 billion (+ 13.0% yoy) and operating income at KRW17.3 billion (+ 21.0% yoy) .


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