[Click eStock] "Lotte Rental to Continue Strong 3Q Performance Despite Peak-Out Concerns"

[Asia Economy Reporter Myunghwan Lee] NH Investment & Securities announced on the 16th that it maintains a Buy rating and a target price of 61,000 KRW for Lotte Rental. The company also forecasted that despite concerns about a peak-out, Lotte Rental will achieve record quarterly earnings in the third quarter of this year.

NH Investment & Securities projected Lotte Rental's consolidated sales for the third quarter of this year to increase by 13% year-on-year to 692 billion KRW, and operating profit to grow by 21% to 69.2 billion KRW. This would be the highest quarterly performance ever recorded.

By segment, sales in the auto rental business are expected to increase by 11% compared to the same period last year, due to the continued effect of increased long-term rental car orders. The impact of a slowdown in domestic travel demand caused by the recovery of overseas travel is expected to be minimal, as short-term rentals account for only about 10% of sales in the auto rental business.

The used car segment is also expected to continue its growth trend. With an increase in the sales proportion of sport utility vehicles (SUVs) and large cars, the average used car transaction price in the third quarter rose slightly to around 14.2 million KRW compared to the second quarter. It was also noted that the average used car transaction price can be volatile depending on the model and year. NH Investment & Securities diagnosed that with a high operating profit margin of over 20% maintained and one more used car auction compared to the same period last year, both demand and supply are improving, leading to expected strong performance.

Researcher Younghoon Joo of NH Investment & Securities advised, "Concerns about a peak-out in major business segments such as falling used car prices and weakening rental car demand have persisted throughout the year," but added, "The negative impact related to structural differences in the business model is limited, and it is important to note that record quarterly earnings continue to be achieved."

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