Lotte Rental Revitalized Through Partnership with Foreign Investors

Continued Stock Price Slump Since IPO
Aiming for Further Rebound by Entering Used Car B2C Market

[Asia Economy Reporter Minji Lee] Lotte Rental, which struggled below its IPO price since its KOSPI listing, is recovering thanks to buying momentum from foreign and institutional investors.

According to the Korea Exchange on the 22nd, Lotte Rental's stock price rose 4.6% from 43,850 KRW to 45,900 KRW between the beginning of this month and the 21st. On an annual basis, this represents an increase of over 20%. The driving forces behind the stock price rise are foreign and institutional investors. This month, these two groups purchased stocks worth 22.9 billion KRW and 25.8 billion KRW respectively. In particular, foreign investors maintained net buying except for three trading days from the 25th of last month until the day before.

Lotte Rental, which was listed on the stock market on August 19th last year, has never closed above its IPO price (59,000 KRW) based on closing prices. Although the stock price briefly rose to 60,000 KRW during trading on the day after listing, this was only a temporary surge. The stock price languished in the high 30,000 KRW range for a long time amid criticism that the IPO price was excessively set, making the evaluation as a major IPO company seem unfounded.

Recently, the stock price has rebounded due to expectations for a new business venture into the used car B2C market. With the possibility of large corporations entering the used car B2C market, the company plans to launch an online used car B2C platform in the second half of the year. Through this, the company aims to secure a 10% market share in the used car market by 2025.

Jongwon Lee, a researcher at Eugene Investment & Securities, explained, "As competition for used car purchases intensifies and prices continue to rise, used car purchasing will be a competitive advantage in the early B2C market." He added, "With subsidiaries like Green Car and cooperation with Socar (holding a 13.19% stake), the company can secure purchase volumes, making it the biggest beneficiary of market liberalization."

Securities experts say that Lotte Rental is transitioning from a comprehensive rental company to a mobility platform business company through vertical integration covering 'purchase and rental, B2B and B2C sales, and maintenance,' and that a revaluation is necessary. The securities industry has already raised its expectations for Lotte Rental, with Hanwha Investment & Securities setting the highest target price at 75,000 KRW.

Meanwhile, first-quarter sales are estimated at 649 billion KRW and operating profit at 65.9 billion KRW, representing growth of 10% and 34% respectively compared to the same period last year. Long-term rental car orders with contract periods of 3 to 5 years increased by 30% compared to last year, and the average used car transaction price rose by about 1 million KRW to 14.4 million KRW, which is expected to have significantly improved profit margins.

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