[Click eStock] "Lotte Rental Acquires SoCar Shares... Expecting Synergy"

[Asia Economy Reporter Ji Yeon-jin] NH Investment & Securities stated on the 8th that Lotte Rental's acquisition of shares in car-sharing company Socar and the cooperative relationship between the top 1 and 2 vehicle rental companies are expected to create synergy.

Lotte Rental announced the day before that it would acquire a 13.9% stake in Socar for 183.2 billion KRW. The sellers are Clarendon Investment Partners and 11 others, who are financial investors (FI). Socar's corporate value based on the equity value is 1.3139 trillion KRW. If this share acquisition is completed, the shareholding structure will be 29.1% for the largest shareholder, 19.0% for SK, 13.9% for Lotte Rental, and 38.0% for others.

Researcher Joo Young-hoon of NH Investment & Securities said, "Currently, Socar operates about 15,000 vehicles, and Lotte Rental operates about 9,200 vehicles through its subsidiary Green Car, so synergy is expected through the cooperative relationship between the first and second largest operators." He added, "As aggressive marketing by both companies to expand market share eases, profitability improvement seems possible, and in the mid-to-long term, we expect joint creation of a future mobility business ecosystem including electric vehicles, charging-combined parking, and autonomous driving."

Although there is a put option for the largest shareholder (up to 5% of issued shares, exercisable within six months after the expiration of the lock-up period) and Lotte Rental's preemptive purchase rights (all or part of the largest shareholder's shares, exercisable within one year after the expiration of the lock-up period), since Socar filed for preliminary listing review in January, there is also a high possibility of Lotte Rental expanding its stake if the listing is realized.

Socar's estimated sales last year were 280 billion KRW, with an operating loss of 7 billion KRW. Researcher Joo said, "The acquisition valuation is at a price-to-sales ratio (PSR) of about 4.7 times, which is similar to global top-tier companies such as Uber at 4.6 times and Lyft at 4.5 times. Although it may seem expensive, it should be considered that the sales growth rate stagnated in the single digits during 2020-2021 due to the impact of COVID-19." He added, "Since the sales growth rate was as high as 61% in 2019, if business normalization occurs with the reopening, sales will increase and the valuation burden will be alleviated."

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