[Click eStock] "SK Rent-a-Car, Earnings Expectations Raised... Target Price Up 16%"

[Asia Economy Reporter Park Jihwan] Hyundai Motor Securities evaluated on the 6th that SK Rent-a-Car recorded an earnings surprise in the second quarter and has sufficient potential for stock price revaluation through favorable performance momentum expected to continue in the second half of the year. They maintained a 'Buy' investment rating and raised the target price by 15.8% from the previous 19,000 KRW to 22,000 KRW.

Park Jongryeol, a researcher at Hyundai Motor Securities, emphasized, "The second-quarter operating results exceeded initial forecasts," adding, "This was due to the strong performance in Jeju Island and the robust used car prices, which led to favorable results in all sectors including rental and used car sales." With the full-scale synergy effect of the integrated corporation being realized, it is expected that favorable performance momentum will continue in the second half of the year.

On a consolidated basis, second-quarter sales amounted to 254.8 billion KRW and operating profit was 28 billion KRW, increasing by 18.2% and 101.7% respectively compared to the previous year. Researcher Park Jongryeol stated, "Sales showed a favorable growth trend driven by sustained strength in long-term rentals and short-term rentals centered on Jeju Island." Operating profit recorded a growth rate significantly exceeding sales growth due to substantial improvement in profitability in the short-term rental and used car sales sectors. The operating profit margin improved by 4.6 percentage points compared to the same period last year, reaching 11.0%.

Favorable performance momentum is expected to continue in the second half of the year. In particular, the short-term rental sector, which has entered the peak season, is anticipated to drive operating results due to a surge in domestic travelers to Jeju Island. The used car sales sector is also expected to maintain a steady performance due to continued strength in long-term rentals and robust used car prices.

Along with the realization of synergy effects from the integrated corporation, the low base effect from last year also positively contributes to improving performance momentum. In the rental sector, the integration of SK Rent-a-Car and AJ Rent-a-Car expanded the number of registered vehicles to 135,000 units by the end of the first quarter this year. The gradual increase in the number of registered and operated vehicles is expected to continue in the second half of the year.

Researcher Park Jongryeol stated, "Reflecting the second-quarter results that significantly exceeded initial expectations, we have revised upward the annual earnings forecast," adding, "Annual sales and operating profit have been raised by 5.0% and 29.8% respectively compared to previous forecasts, with annual sales expected to reach 1.0665 trillion KRW and operating profit 43.6 billion KRW, representing increases of 23.5% and 50.4% compared to last year."