HEDEF ARAÇ KİRALAMA VE SERVİS A.Ş.

Regulatory Filings • Jun 14, 2024

JCR Eurasia Rating CR-ER. Group of Japan Credit Rating Agency, Ltd." (JCR

Corporate Credit Rating

□New ⊠Update

Sector: Operational Leasing Publishing Date: 14/06/2024 Team Leader Yesim KARAOĞI II +90 212 352 56 73 vesim.karaoglu@jcrer.com.tr Assistant Analyst

Fatih Furkan BALCIOĞLU +90 212 352 56 73 fatihfurkan.balcioglu@jcrer.com.tr

RATINGS		Long Term	Short Term
ICRs (Issuer Credit Rating Profile)	National ICR	A (tr)	11 (tr)
	National ICR Outlooks	Stable	Stable
	International FC ICR	BB
	International FC ICR Outlooks	Stable
	International LC ICR	BB
	International LC ICR Outlooks	Stable
ISRs (Issue Specific Rating Profile)	National ISR
	International FC ISR
	International LC ISR	۰
Sovereign*	Foreian Currency	BB (Stable)
	Local Currency	BB (Stable)
* Assigned by ICR on May 10, 2024

level

prefer leased vehicles

of

governance practices

• Long standing sector experience and adequate

with

corporate

compliance

Hedef Araç Kiralama ve Servis A.Ş.

JCR Eurasia Rating, has evaluated Hedef Arac Kiralama ve Servis A.S. in the investment grade category with high credit quality on the national scale and affirmed its Long-Term National Issuer Credit Rating at 'A (tr)' and Short-Term National Issuer Credit Rating at 'J1 (tr)' with 'Stable' outlooks. On the other hand, the Long Term International Foreign and Local Currency Issuer Credit Ratings and outlooks were assigned as 'BB/Stable' as parallel to international ratings and outlooks of Republic of Türkiye.

Hedef Arac Kiralama ve Servis A.S. (referred to as 'the Company' or 'Hedef Filo') was founded in 2003 in Istanbul and specializes in the fleet rental of various motor vehicle brands. The Company operates offices in Istanbul, Izmir, Bursa, Ankara, and Konya, employing 170 staff members as of the end of 2023. By this time, the Company manages a fleet of 14,311 vehicles. Beyond fleet leasing, Hedef offers operational leasing through its online sales platform "Filomingo," catering primarily to self-employed professionals such as pharmacists, lawyers, and accountants. They also provide hourly and daily car rentals via the "Tiktak" car-sharing service and sell second-hand cars through "OtoNet." Tiktak Yeni Nesil Ulaşım Çözümleri ve Araç Kiralama A.Ş. ("Tiktak") was established on June 1, 2021. Hedef Filo owns 36.46% of Tiktak, giving it significant influence but not control, and thus it is included in the consolidation using the equity method of accounting. Additionally, in 2023, the Company acquired "Letgo Mobil," "Otonet". Tiktak, Letgo Mobil and Otonet were classified as assets held for sale according to a board decision on December 25, 2023. Additionally, "Project EV" was established on April 14, 2023, as a 100% subsidiary of Hedef Filo, to serve as an electric vehicle rental platform.

As of 31 December, 2023, shareholder structure is as follows; Önder Erdem (50%) and Ersan Öztürk (50%).

Key rating drivers, as strengths and constraints, are provided below.

Strengths	Constraints
· Growth in sales revenue driven by second hand car sales and maintaining core	• Market risk exposure due to debts with floating rate
profitability metrics in 2023	• Increasing fleet renewal costs and working
• Strong equity structure mainly supported by	capital requirements causing further external
internal resource generation capacity	financing need
• Multiyear contracts providing revenue visibility	• Volatility in second-hand car prices in the
• Low doubtful receivable ratio supporting	market may put pressure on profitability
receivable quality	• High level of operating ratio putting pressure
• Steady demand outlook in the fleet leasing	on efficiency and profitability
sector due to the willingness of companies to	• Deterioration in cash flow metrics mainly due

Deterioration in cash flow metrics mainly due to significant acquisitions in FY2023

• $\bullet$ Sector specific regulations and high correlation with macroeconomic dynamics may result fluctuations in demand
• · Leading economic indicators signal global economic slowdown as quantitative tightening actions aim restrict to consumption growth and achieve a softlanding in the domestic side

Considering the aforementioned points, the Company's Long-Term National Issuer Credit Rating has been affirmed at 'A (tr)'. The Company's growth in sales revenues, equity structure, high revenue visibility, long sector experience and adequate level of compliance with corporate governance practices along with high market risk exposure due to floating rate of issued debts, high level of operating ratio and ongoing uncertainties arisen from geopolitical tensions as well as global tight financial conditions have been evaluated as important indicators for the stability of the ratings and the outlooks for Long and Short-Term National Issuer Credit Ratings are determined as 'Stable'. The Company's revenue and profitability performance, debt structure, liquidity position and asset quality will be closely monitored by JCR Eurasia Rating in upcoming periods. The macroeconomic indicators at national and international markets, as well as market conditions and legal framework about the sector will be monitored as well.

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