[Click eStock] Lotte Rental, SoCar IPO and Used Car B2C Platform Launch... Opportunity for Value Reassessment

[Asia Economy Reporter Lee Seon-ae] SangSangIn Securities announced on the 25th that it is initiating coverage on Lotte Rental with a Buy rating and a target price of 62,000 KRW, citing the potential for medium- to long-term stock price appreciation.

First, the company expects continued strong orders for long-term rental cars and steady short-term rental trends, forecasting record-high earnings for the second quarter. The second-quarter results are projected to be 671.3 billion KRW in revenue (a 10% increase) and 76.1 billion KRW in operating profit (a 25% increase). Demand for short-term rentals in Jeju Island, which has a high margin contribution, is expected to rise seasonally from the third quarter, improving profitability in the second half. The expected full-year 2022 results are revenue of 2.6669 trillion KRW and operating profit of 305.8 billion KRW.

For second-half momentum, the company pointed to the SoCar IPO and the launch of a used car B2C platform. Researcher Choi Seung-ho of SangSangIn Securities stated, "If the SoCar IPO proceeds as planned, the valuation of Lotte Rental, as a mobility platform and through its car-sharing service Green Car, could be enhanced."

The platform launch is scheduled for October. The used car platform brokerage model is a business that earns brokerage fees, so the revenue volume is not large, but the operating profit margin reaches 30-40%. Researcher Choi emphasized, "Even capturing half the volume of Encar.com, the current number one brokerage platform, could increase operating profit by 12 billion KRW annually."

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