Eugene Investment Securities raised its target price for Lotte Rental from 46,000 won to 59,000 won on October 26, reflecting stable performance growth in its core business and expectations for increased investment following the change in major shareholders to TPG. The firm maintained its 'buy' rating but noted that initial acquisition costs and uncertainties related to business restructuring could pose short-term challenges.
Lee Jae-il, a researcher at Eugene Investment Securities, stated, "The upward trend in stable core business performance is expected to continue, and there is a high likelihood that growth momentum will be reinforced through new investments post-acquisition. While initial uncertainties from the acquisition may create short-term noise, we believe the long-term investment appeal remains strong."
Eugene Investment Securities forecasts Lotte Rental's third-quarter revenue to increase by 3.2% year-on-year to 782 billion won, with operating profit expected to rise by 24.8% to 93 billion won. The net profit attributable to controlling shareholders is projected to reach 41 billion won, a 4.0% increase, aligning with market consensus.
The firm anticipates continued profit growth in its core short- and long-term rental business. Although profits from used car sales are expected to decline, strong performance in short-term rentals is anticipated due to the peak travel season in the domestic market. However, rising interest costs due to increasing rates are seen as unavoidable.
The change in major shareholders is also viewed as a long-term growth factor. Lotte Rental has entered into an acquisition deal with TPG, a global private equity firm, at a price of 59,000 won per share, totaling 1.3 trillion won. An extraordinary shareholders' meeting scheduled for October 30 will address the appointment of two directors from TPG, with final payment and share transfer expected to be completed within the year.
Lee noted, "TPG is the second-largest shareholder of Kakao Mobility, which may create synergies with future mobility platforms. There is also potential for offering various rental and used car services on the Kakao platform."
The long-term investment appeal is considered high. Eugene Investment Securities projects Lotte Rental's revenue to reach 3.39 trillion won and operating profit to hit 349 billion won in 2026, with further increases to 3.18 trillion won and 370 billion won, respectively, in 2027.
Lee Jae-il, a researcher at Eugene Investment Securities, stated, "The upward trend in stable core business performance is expected to continue, and there is a high likelihood that growth momentum will be reinforced through new investments post-acquisition. While initial uncertainties from the acquisition may create short-term noise, we believe the long-term investment appeal remains strong."
Eugene Investment Securities forecasts Lotte Rental's third-quarter revenue to increase by 3.2% year-on-year to 782 billion won, with operating profit expected to rise by 24.8% to 93 billion won. The net profit attributable to controlling shareholders is projected to reach 41 billion won, a 4.0% increase, aligning with market consensus.
The firm anticipates continued profit growth in its core short- and long-term rental business. Although profits from used car sales are expected to decline, strong performance in short-term rentals is anticipated due to the peak travel season in the domestic market. However, rising interest costs due to increasing rates are seen as unavoidable.
The change in major shareholders is also viewed as a long-term growth factor. Lotte Rental has entered into an acquisition deal with TPG, a global private equity firm, at a price of 59,000 won per share, totaling 1.3 trillion won. An extraordinary shareholders' meeting scheduled for October 30 will address the appointment of two directors from TPG, with final payment and share transfer expected to be completed within the year.
Lee noted, "TPG is the second-largest shareholder of Kakao Mobility, which may create synergies with future mobility platforms. There is also potential for offering various rental and used car services on the Kakao platform."
The long-term investment appeal is considered high. Eugene Investment Securities projects Lotte Rental's revenue to reach 3.39 trillion won and operating profit to hit 349 billion won in 2026, with further increases to 3.18 trillion won and 370 billion won, respectively, in 2027.
* This article has been translated by AI.
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