[Click eStock] "Socar, Expected Improvement in Structure and Cost Reduction"

Sangsangin Securities analyzed on the 17th that the non-face-to-face car-sharing company Socar is expected to achieve overall structural improvement and cost reduction, and is likely to turn a profit this year. As of the 14th, Socar's closing price was 18,770 KRW.

On the same day, Junho Lee, a researcher at Sangsangin Securities, said, "Socar's sales in the first quarter were 90.6 billion KRW, a 6% increase compared to the same period last year, and the operating loss was 10.8 billion KRW, continuing the deficit," adding, "This year, sales are expected to increase by 12% from last year to 445 billion KRW, and operating profit is projected to be 2.4 billion KRW (turning to profit)." Socar recorded an operating profit of 9.5 billion KRW in 2022 and an operating loss of 9.7 billion KRW last year.

The effects of Socar 2.0 strategy, which started in the fourth quarter of last year, are anticipated. One of the core businesses of the strategy is to ensure seamless vehicle operation even in the off-season by flexibly switching between Socar Plan (monthly vehicle rental service) and short-term car sharing.

The researcher noted, "Due to increased demand for Socar Plan, the vehicle operation period was extended from 36 months to 48 months, and despite no revenue from used car sales, growth has been shown," adding, "In fact, used car sales revenue in the first quarter of last year was 11.8 billion KRW, but in the recent first quarter, it was only about 260 million KRW."

Overall cost reduction is also a noteworthy aspect. The researcher said, "The main issue was the increase in marketing expenses, which was due to the expansion of platform services starting in May last year," and predicted, "Marketing expenses have been on a downward trend since the third quarter of last year, so it is expected to turn profitable in the fourth quarter of this year."

Furthermore, he added, "Considering that there were one-time stock compensation costs and equity method losses last year, the reduction in annual expenses this year is confirmed," and "The currently increased interest expenses are also due to the extension of the vehicle operation period. They are expected to decrease as used car sales begin next year."