[Click eStock] "SK Rent-a-Car, Continuing Stable Growth"

Despite COVID-19, Short-term Rental Profitability Improves Thanks to Jeju Island Travelers
KTB Investment & Securities "Maintains SK Rent-a-Car Target Price at 17,000 Won"

[Asia Economy Reporter Gong Byung-sun] SK Rent-a-Car posted third-quarter results this year that fell short of market consensus. However, it is expected to continue growing in the short term thanks to operations in Jeju Island and in the long term due to an increase in the number of long-term rental vehicles.

According to KTB Investment & Securities on the 19th, SK Rent-a-Car's third-quarter sales this year rose 27.13% year-on-year to 271.5 billion KRW, and operating profit increased 15.78% to 25.4 billion KRW during the same period. Sales exceeded consensus by 1.34%, but operating profit was 14.02% below expectations.

However, profitability has continuously improved. Although the off-season and COVID-19 caused disruptions in short-term rental operations at inland airports, the number of travelers to Jeju Island increased, improving profitability in the short-term rental segment. In fact, the operating profit margin in the third quarter was about 9.4%, up 1.2 percentage points from last year's 8.2%.

Additionally, the number of vehicles has steadily increased due to the transfer of vehicles from SK Networks' rental car division. The number of registered rental cars in the third quarter reached 141,000, with the vehicle count increasing every quarter since joining the SK Group.

Long-term growth is also anticipated. Regardless of COVID-19, the number of long-term rental vehicles is rising, which is expected to contribute to stable growth. Furthermore, the rise in used car prices due to COVID-19 is positively impacting used car sales. Kim Jae-yoon, a researcher at SK Securities, observed, “As long as the vehicle semiconductor supply issue is not resolved, the strong performance in the used car segment will continue.”

Accordingly, KTB Investment & Securities maintained a ‘Buy’ rating and a target price of 17,000 KRW for SK Rent-a-Car. The closing price on the previous day was 10,600 KRW.

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