이 기사는 2021년 06월 17일 07:50 thebell 에 표출된 기사입니다.

Lotte Rental is aiming for a valuation of about 2.5 trillion won ($2.3 billion) in its initial public offering on Kospi, with the car rental arm of South Korea’s Lotte Group expected to file its IPO prospectus later this month, according to industry sources.

The car rental company is likely to use the enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio to boost its valuation by capitalizing on operating profit growth in the first quarter, sources said.

“Lotte Rental recorded good operating profit growth in the latest quarter, and based on this, it will likely choose the valuation method that is most favorable,” said a market insider. “The company is likely to use the EV/EBTIDA ratio to decide the offer price as the car rental business is capital-intensive in nature.”

The peer group is understood to be composed of domestic and foreign rental car companies. Comparables of Lotte Rental, which owns auto financing unit Lotte Auto Lease and car-sharing unit Greencar, include the likes of SK Rent-a-Car, SK Networks and Hyundai Capital.

SK Rent-a-Car and SK Networks had EV/EBITDA ratios of 4.99 times and 5.6 times, respectively, as of the end of March this year.

Lotte Rental’s 2021 full-year EBITDA is roughly forecast to be 1.16 trillion won based on its first-quarter EBITDA of 290.7 billion won. The company’s enterprise value is estimated to be 5.81 trillion won based on the assumption of an EV/EBITDA multiple of 5 times. Its net debt, which is deducted from the enterprise value to get the equity value, stood at 3.79 trillion won at the end of March.

Burgeoning car-sharing market

The rising valuation of So Car, a major competitor of Lotte Rental’s subsidiary Greencar, is likely to help justify the car rental company’s high valuation. So Car was valued at 1 trillion won in its latest funding round, and is expected to grow to 5 trillion won over the next several years despite its continued operating losses.

US ride-hail services like Uber and Lyft could be considered as comparables, but they are unlikely to be included in the peer group as their EBITDA are negative.

Lotte was recently approached by Seoul-based Elevation Equity Partners about a possible purchase of a 25% stake in Greencar for 150 billion won, but the deal ultimately fell through as the conglomerate sought a 1 trillion won valuation for its car-sharing unit. In December 2018, Greencar raised 35 billion won from energy company GS Caltex at a valuation of 350 billion won.

“How strong demand for Lotte Rental shares in its IPO will be is also likely to indicate public market investors’ view on Greencar’s growth prospects,” another market insider said.

Lotte Rental has recorded steady growth on the back of continued investment in its vehicle fleet. Its consolidated revenue increased 8.9% year-on-year to 594.4 billion won in the first quarter. Operating income jumped 52.7% to 49.4 billion won in the same period.

But at the same time, the company’s leverage ratio and debt ratio rose to 7.21 times and 621%, respectively, as of the end of March on a consolidated basis.

“Our debt is rising faster than equity due to increased investment. Proceeds from the IPO will help improve our financial position,” said Lotte Rental. (Reporting by Chan-mi Oh)