[Click eStock] Lotte Rental, Record High Q3 Earnings Expected 'Stock Undervalued Zone'

[Asia Economy Reporter Lee Seon-ae] Samsung Securities announced on the 23rd that it maintains a buy rating and a target price of 60,000 KRW for Lotte Rental. This is based on the expectation of record-breaking performance in the third quarter and the judgment that the stock price remains in an undervalued range. Lee Chang-hee, a researcher at Samsung Securities, emphasized, "Differentiation in terms of growth compared to competitors is expected in the future, and considering the positive outlook for the expansion of the used car business, the current stock price level is judged to be in an undervalued range."

Lotte Rental is expected to record its highest-ever performance in the third quarter, with sales and operating profit increasing by 17.3% and 26.8% year-on-year to 717 billion KRW and 92.4 billion KRW, respectively. Looking at each business segment, the auto rental business segment is estimated to see an 11.5% increase in sales compared to the same period last year due to the price increase effect during the third quarter peak season. Despite the recent downward trend in sales prices in the overall used car market, the used car business segment is expected to continue strong performance following the previous quarter. This is because most of the used cars sold by Lotte Rental are nearly new used vehicles whose 2-3 year rental contracts have ended, and their selling prices are estimated to have remained high following the previous quarter. The mobility business segment (Green Car) is also expected to turn profitable in the third quarter due to the peak season effect, and with strong performance across all business segments, Lotte Rental is forecasted to achieve its highest-ever performance in the third quarter.

Since the used car sales business was not designated as a livelihood-type suitable industry in March, the entry of large corporations into the used car market has become more visible. Accordingly, Lotte Rental is expected to benefit, and this is considered a key investment point going forward. Lotte Rental has announced plans to achieve 250,000 used car sales by 2025. The detailed plan for 250,000 used car sales is divided into 25% direct sales (rental car sales), 15% distribution sales (direct purchase and sale to consumers), and 60% brokerage sales (brokerage sales through a platform). The researcher stated, "A 'used car sales platform' for expanding the B2C (business-to-consumer) used car business, which corresponds to distribution and brokerage, is scheduled to be launched at the end of October," adding, "Following the launch of the used car sales platform, significant growth in the company's used car sales business is expected."

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