[Click eStock] "SK Rent-a-Car, Rental Sales Strong Despite Concerns"

Excellent performance in both short and long term... Growing expectations with With Corona
Anticipation for new businesses such as electric vehicle and battery rental also increasing

SK Rent-a-Car's VI

[Asia Economy Reporter Minwoo Lee] SK Rent-a-Car posted double-digit growth in both sales and operating profit in the third quarter of this year compared to the same period last year. It is analyzed that both used car sales and long- and short-term rentals performed well.

On the 4th, DS Investment & Securities maintained its 'Buy' rating and target price of 21,000 KRW for SK Rent-a-Car, citing these factors. The closing price on the previous day was 12,100 KRW.

SK Rent-a-Car recorded consolidated sales of 271.5 billion KRW and operating profit of 25.4 billion KRW in the third quarter of this year. These figures represent increases of 27.1% and 15.8%, respectively, compared to the same period last year. Sales also exceeded market consensus estimates by 1.34%. This is attributed to continued strong performance in long-term rentals and used car sales, as well as steady short-term rentals centered around Jeju Island, contrary to concerns.

However, operating profit fell about 14% short of consensus estimates. This is believed to be due to one-time costs related to advertising expenses and internal process improvements during the integration following the acquisition of AJ Rent-a-Car. The one-time costs are estimated to be around 4 billion KRW, and excluding these, the results generally meet consensus expectations.

Since July, concerns over sales declines due to the spread of the COVID-19 Delta variant have been alleviated. On the contrary, entering the 'with COVID' phase, short-term rentals are expected to benefit from increased travel demand.

Seunghoe Kim, a researcher at DS Investment & Securities, said, "Long-term rentals are showing better-than-expected results in acquiring new customers using the SK brand while customers with contracts expiring at SK Networks are being smoothly transferred." He also forecasted that the strong used car prices due to supply instability of automotive semiconductors will continue until the first half of next year, sustaining the momentum for earnings growth.

The new business sector is also noteworthy. SK Rent-a-Car plans to transform into an electric vehicle (EV) rental specialist in line with SK Group’s ESG (Environmental, Social, and Governance) strategy. In September, it surpassed 3,000 EV rental sales, far exceeding last year’s 1,057 units. After establishing an EV park in Jeju Island in the second half of next year, it plans to convert all rental cars to EVs by 2025. Additionally, through the expansion of the EV vehicle management solution 'SmartLink,' it is collecting driving and battery data and is considering launching a new battery rental business.

This content was produced with the assistance of AI translation services.