Hana Securities on September 2 projected that Lotte Rental's dividend payout ratio will increase following a change in major shareholders, raising its target price to 57,000 won. The investment recommendation remains a 'buy.'
Analyst Ahn Do-hyun stated in a report that "Lotte Rental is not just a car rental company but also holds the largest vehicle data (for autonomous driving learning) in the country, making it a significant player. We believe it is time to reassess its new growth strategy and dividend direction."
Ahn noted that the Fair Trade Commission approved the acquisition of Lotte Rental by TPG, a U.S.-based private equity firm. He explained that the entire 61.2% stake held by Hotel Lotte and Busan Lotte Hotel will be sold to TPG at a price of 59,000 won per share, totaling 1.3 trillion won.
He added, "The only aspect to reconsider following the change in major shareholders is shareholder returns. Lotte Rental's position as the leading player in the car rental market is expected to remain solid, and its profitability and cash flow based on this position are likely to be stable."
Furthermore, Ahn assessed that "the car rental business is sensitive to interest rates, but Lotte Rental has strong pricing power and a variety of debt financing options. With limited annual rollover debt, concerns about profitability during high-interest periods are expected to be minimal. The only change will be in the level of shareholder returns."
* This article has been translated by AI.
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