K Car, Profitability Improvement Expected... Up to Management Rights Change

[Asia Economy Reporter Junho Hwang] Samsung Securities expressed optimism about K Car's third-quarter performance this year and raised its target stock price. In particular, with the expiration of the mandatory holding period of the largest shareholder, Han & Co Auto Service Holdings Limited (holding approximately 73%), on the 13th, they analyzed that potential changes in management control should be considered going forward.

Samsung Securities expects K Car to record sales of 597.4 billion KRW in the third quarter of this year, representing a 21.9% increase compared to last year. They also noted that in the upcoming third-quarter earnings announcement, it will be important to examine profitability improvements due to expanded self-purchases and whether the increase in used car sales volume continues.

Ultimately, in used car trading, the key to future profitability improvement lies in how many high-quality used cars can be purchased at low prices. To this end, K Car has adopted a strategy to increase the proportion of purchase channels such as K Car Home Service and trade-in (purchases from K Car customers, accounting for about 27% of total purchases as of the second quarter).

Samsung Securities anticipated that demand for used car trading, which had slowed during the third quarter, recovered, and that the total number of used car sales likely grew steadily due to the Chuseok holiday effect. They also projected that with the opening of a new auction site (estimated to handle about 600 vehicles) and the commencement of operations at the tentatively named K Car Home Service Mega Center, sales growth driven by an increase in used car sales volume would be possible.

Researcher Changhee Lee of Samsung Securities maintained the target stock price at 25,000 KRW per share, stating, "We believe that sales expansion and profitability improvement driven by an increase in used car sales volume are valid going forward."