[Click eStock] "K Car, Top Pick in the Mobility Industry"

Published 18 Apr.2023 09:00(KST)

Shinhan Investment Corp. stated on the 18th that it is time to pay attention to the mobility industry and selected K Car as its top pick.

Won Jae-hee, a researcher at Shinhan Investment Corp., explained, "The mobility industry, including used cars, rental cars, and car sharing, experienced a downturn last year due to the impact of COVID-19, rising interest rates, economic recession, and decreased private purchasing power."

He added, "This year, with the limitation on domestic base rate hikes, a rebound in consumer sentiment, and the transition to endemic, mobility demand is expected to increase," and "the earnings of major domestic mobility listed companies will improve."

Furthermore, he emphasized, "The used car industry is likely to recover starting from the first quarter of this year, marked by a recovery in domestic used car sales volume," and "concerns over demand slowdown for finished vehicles caused by interest rate hikes and economic recession, which led the downturn, have been alleviated."

He analyzed, "Wholesale prices of used cars have shifted to an upward trend since March, and retail prices are expected to rise from the second quarter," adding, "Vehicle consumption, which decreased during the COVID-19 period, is returning to the used car market as deferred demand."

Researcher Won explained, "The rental car industry is a business that generates profits by purchasing rental assets with other people's capital," and "capital procurement through low interest rates is important." He continued, "The long-term profits of rental car companies are determined by the spread between ‘rental income and procurement interest rates’ and gains from used car sales," forecasting, "profits will increase due to reduced interest expenses and rising spreads."

He stated, "K Car has endured the worst period and is facing the optimal time to expand market share in preparation for industry recovery," and "with fewer competitors in the used car market, an expansion of market share by corporate-type companies is expected."