"Lotte Rental Shows Strong Private Equity Acquisition Interest, Shareholder Returns to Rise" [Click e-Stock]

Shinhan Investment Maintains Buy Rating and Target Price

On July 14, Shinhan Investment Corp. maintained its "Buy" investment opinion and target price of 43,000 won for Lotte Rental.

Choi Seunghwan, an analyst at Shinhan Investment Corp., stated that "the core short-term and long-term auto rental businesses are performing very well." Choi projected that Lotte Rental's second-quarter 2026 results would include sales of 779.9 billion won and operating profit of 87 billion won, representing year-on-year increases of 4.2% and 12.7%, respectively. According to Choi, demand for long-term rentals continues to rise with an increasing number of vehicles being introduced, while short-term rentals are expected to grow significantly due to higher inbound travel and domestic tourism.

However, used car sales are expected to contract year-on-year due to the war in the Middle East. This is attributed to direct export restrictions to the region and rising logistics costs. As a result, the number of vehicles exported is forecast to decline by 20% compared to the previous year. Choi added that these reduced export volumes will be redirected to domestic used car retail and long-term rental channels and are expected to return to the company’s overall profit within a year.

Meanwhile, it has been reported that global private equity fund manager Texas Pacific Group (TPG) submitted a sole bid for the acquisition of Lotte Rental, indicating a high level of acquisition intent. Choi assessed that "the failure of Affinity Equity Partners' acquisition of Lotte Rental was due to monopoly concerns, but an acquisition by a general private equity fund is unlikely to encounter major hurdles." He went on to say, "As an exit strategy after the acquisition, a high-dividend policy aimed at securing cash flow is likely to be pursued, which means the current shareholder return policy, with a total shareholder return rate of 40%, is expected to be further strengthened."

This content was produced with the assistance of AI translation services.