Lotte Rental Sets IPO Price at 59,000 Won... Should You Aim for Subscription?

A Total of 762 Domestic and International Institutions Participated with a 217.6 to 1 Competition Rate
General Subscription Scheduled for the 9th-10th of This Month, Listing Expected on the 19th

[Asia Economy Reporter Junho Hwang] KakaoBank, which was listed on the 6th, failed to achieve a "ttasang" (first-day double price increase), while Lotte Rental Co., Ltd. has set its public offering price at the upper end of the desired range, 59,000 KRW. The securities industry is giving a favorable evaluation of the public offering price, and the general subscription will take place on the 9th and 10th.

Public Offering Price 59,000 KRW

Lotte Rental announced on the 6th that in the demand forecast conducted over two days on the 3rd and 4th targeting institutional investors, a total of 762 institutions participated, including 640 domestic institutions and 122 overseas institutions, recording a competition rate of 217.6 to 1. Among the institutional volume participating in the demand forecast, 99.3% submitted prices at or above the upper end of the desired public offering price range of 59,000 KRW (including those who did not specify a price). The total public offering amount was finalized at approximately 850.9 billion KRW.

The securities industry's evaluation is favorable. Jongseon Park, a researcher at Eugene Investment & Securities, said, "The desired public offering price (47,000 to 59,000 KRW) corresponds to an EV/EBITDA multiple of 4.4 to 4.8 times when applying this year's expected EBITDA (1.13 trillion KRW), which is a 14.2 to 21.1% discount compared to the average EV/EBITDA of 5.6 times applied to the recent four quarters' EBITDA of domestic similar companies (SK Rent-a-Car, AJ Networks)."

After listing, the freely tradable volume of Lotte Rental is 31.5% of the total shares (11.54 million shares), which is not a large amount. However, the ratio of mandatory lock-up agreements, where shares are not sold for a certain period, was recorded at 14.7%.

Lotte Rental stated that its future growth potential was also highly evaluated, but the ratio for KakaoBank, which was listed on the 5th, was 59.82%, and SK IE Technology (64.6%) and SK Bioscience (85.27%), which were listed this year, had higher ratios.

Mandatory Lock-up Agreement Ratio 14.7%

Lotte Rental's public subscription for general investors will be held over two days from the 9th to the 10th. The joint lead managers for the listing are Korea Investment & Securities Co., Ltd. and NH Investment & Securities Co., Ltd., and the joint managers are KB Securities Co., Ltd. The scheduled listing date is the 19th of this month.

Lotte Rental is a company that provides services such as long- and short-term rental cars, auto leasing, used cars, car sharing, and general rentals. Its major subsidiaries include the car-sharing service company "Greencar," the rental car maintenance company "Lotte Auto Care," and the leasing and financial installment company "Lotte Auto Lease."

Last year, it achieved sales of 2.2521 trillion KRW, and in the first quarter of this year, it recorded sales of 588.9 billion KRW, operating profit of 49.2 billion KRW, and net profit of 18.6 billion KRW. Compared to the same period last year, sales increased by 8.7%, operating profit by 49.1%, and net profit by 144.7%.

Hyunsoo Kim, CEO of Lotte Rental, said, "We express our gratitude to all domestic and foreign institutional investors who participated in the demand forecast based on the high evaluation of our company's competitiveness and growth potential," and added, "We hope that the strong interest shown during the demand forecast period will continue into the general public subscription starting on the 9th."