"Lotte Rental Expected to Significantly Raise Shareholder Returns" [Click e-Stock]

On September 3, Hana Securities raised its target price for Lotte Rental from 44,000 won to 57,000 won, expecting significant improvement in shareholder returns following the Fair Trade Commission's approval of the private equity fund TPG's acquisition of the company. The firm maintained its 'Buy' investment rating.

Dohyun Ahn, a research analyst at Hana Securities, stated in a report released the same day, "The entire 61.2% stake held by Hotel Lotte and Busan Lotte Hotel is scheduled to be sold to TPG," adding, "It is known that TPG plans to pay the entire acquisition amount with its own equity capital."

After the change of Lotte Rental's largest shareholder, the main aspect to reconsider is shareholder returns. Analyst Ahn noted, "Lotte Rental's leading position in the car rental market is expected to remain solid, and its profitability and cash flow based on this position are stable," adding, "Since the company uses operating asset debt when purchasing vehicles, it has sufficient capacity for dividend payouts." He further explained, "There is a high likelihood that most of this year's earnings per share (EPS) forecast of 3,623 won will be used for dividends," diagnosing that "dividends are expected to be raised to a significantly higher level than the existing shareholder return target of over 40% of net income."

Analyst Ahn also stated, "Lotte Rental is not just a car rental company but also the largest holder of automotive data (for autonomous driving learning) in Korea," adding, "It is time for the company to be re-evaluated in terms of its new growth strategy and dividend policy."

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