[Click eStock] "Samchully, Urban Gas Performance Recovery Begins in Second Half"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment on the 22nd presented a buy rating and a target price of 100,000 KRW for Samchully, expecting a recovery in city gas performance from the second half of the year.

Yoo Jaeseon, a researcher at Hana Financial Investment, explained, "In the first quarter, the peak season for heating demand, sales volume decreased due to rising average temperatures, making poor performance inevitable," and added, "From the second quarter, demand recovery centered on other uses is expected due to the normalization of fuel cell operations within the supply area."

Researcher Yoo said, "With a sharp drop in oil prices expected to lower SMP in the summer, if LNG fuel cost per unit shows an advantage over bituminous coal, earnings increase due to higher operating rates can be anticipated." However, he noted that this is achievable only if the recently rapidly rising oil prices reverse and decline again.

Samchully's sales in the first quarter of this year were 1.1643 trillion KRW, down 9.6% year-on-year. Construction volume for Samchully ES decreased compared to the previous year, and sales of S-Power also shrank due to the decline in SMP. Operating profit also recorded 64.5 billion KRW, down 9.4% year-on-year.

However, it is evaluated that the recovery of city gas performance will begin from the second half of the year, and attention should be paid to changes in the power generation market.

Researcher Yoo stated, "With the revision of the city gas retail supply cost calculation standards last March, local governments previously could arbitrarily decide the adjustment range of retail supply costs, but now it has been institutionalized to adjust according to appropriate standards and principles," and evaluated this positively, saying, "Since there was a case last year where Gyeonggi-do withdrew a retail supply cost increase, the strengthening of supply cost principles is positive."

He added, "Considering last year's poor sales performance, an increase in supply costs is inevitable this year as well," and said, "With the supply cost adjustment in July, improvement in city gas sales margin is expected, and attention should also be paid to whether the summer power dispatch order will be reversed."

This content was produced with the assistance of AI translation services.