[Click eStock] "Lotte Rental, Earnings Improvement Expected Starting from Q1"

NH Investment & Securities maintained a target price of 40,000 KRW and a 'Buy' rating for Lotte Rental on the 9th, stating that although the first quarter operating profit fell short of market expectations, performance improvement is expected starting from the first quarter.

Lotte Rental recorded sales and operating profit of 656.9 billion KRW and 56.9 billion KRW respectively in the first quarter, with operating profit falling below market consensus.

Joo Young-hoon, a researcher at NH Investment & Securities, explained in a report on the day, "During the strategic shift towards expanding the used car rental business, a decrease in the number of used car sales has been observed," adding, "In the first quarter, the number of used car sales decreased by 33.3% compared to the same period last year, which was the main cause of the decline in operating profit."

The reduction in the short-term rental car market in Jeju due to increased overseas travel was also one of the factors negatively affecting the business environment.

However, the continuous increase in the number of long-term rental cars through new orders and the asset transfer plan with Shinhan Card, as well as the fact that the number of used car rental inputs surpassed 1,000 units per month, were evaluated positively.

The quarterly performance is also expected to show an improving trend starting from the first quarter. Researcher Joo Young-hoon stated, "Especially from the second half of the year, due to the low performance base and the reflection of sales profits after the termination of used car rental contracts, operating profit is expected to turn to an increase compared to the same period last year."

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