[Click eStock] Lotte Rental Target Price Lowered Despite Growth in Scale

On July 29, Daol Investment & Securities lowered its target price for Lotte Rental to 46,000 won. The investment rating of 'Buy' was maintained.

Lotte Rental's second-quarter revenue is expected to reach 764.7 billion won, up 10.2% from the same period last year, while operating profit is projected to decrease by 0.5% year-on-year to 75.4 billion won.

Yoo Jiwoong, a researcher at Daol Investment & Securities, explained, "The core business, auto rental, is estimated to have achieved 13.2% year-on-year growth in scale, and when focusing only on the long-term segment, high growth of 17.5% was realized, resulting in a net increase effect."

Lotte Rental had experienced a partial contraction in scale up to 2023 as some used car sales were shifted to auto rental. However, starting from the first quarter of last year, the net increase effect?calculated as the sum of returns and new contracts?turned positive, and in the second quarter of this year, it appears to have reached 3,100 vehicles.

Yoo noted, "This result appears to be based on the proportion of extension customers," adding, "The extension customer ratio surged from 26% in 2023 to 49.8% in 2024, and to 57% in the first quarter of this year. Considering the 2025 average, it now seems highly likely that the company will exceed its previous target of 60%."

However, despite Lotte Rental's growth in scale, the target price was revised downward from 48,000 won to 46,000 won.

Yoo stated, "We have revised our 2025 earnings per share (EPS) estimate downward by 7.1%," adding, "It has now been more than four quarters since the company entered a net increase structure in its fleet, and this marks the phase where growth in scale is beginning to emerge. Excluding general rentals, most indicators have started to show an upward trend."

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