"Korea Gas Corporation Faces Growing Performance Pressure... Dividend Likely Difficult"

Q3 Expected Operating Loss of 176.2 Billion KRW
"Performance Takes Priority Over Green New Deal Benefits"

[Asia Economy Reporter Minji Lee] Opinions have emerged that Korea Gas Corporation's performance burden will increase due to the decline in oil prices and losses from its subsidiaries. This year, profits are expected to deteriorate significantly, making it unlikely for the company to pay dividends.

According to financial information firm FnGuide on the 2nd, the expected sales for the third quarter are projected to be 3.69 trillion KRW, a decrease of 18% compared to the same period last year. Operating losses are estimated at 176.2 billion KRW, indicating that the deficit will continue.

Jeong Hye-jeong, a researcher at KB Securities, analyzed, “It is typical for Korea Gas Corporation to record operating losses in the third quarter considering seasonality. Due to ongoing production disruptions at Australia's Prelude and the decline in LNG selling prices caused by low oil prices, the consolidated subsidiaries are expected to incur operating losses of 23 billion KRW, further expanding the consolidated operating loss.”

The possibility of Korea Gas Corporation paying dividends this year is considered slim. In the second quarter, Korea Gas Corporation recognized impairment losses of 435.7 billion KRW on overseas oil fields. Although the impairment losses were calculated based on low international oil prices, making additional impairment recognition unlikely, it is expected that dividends will not be paid this year.

Son Ji-woo, a researcher at SK Securities, explained, “The factor burdening the company's performance is the Exploration & Production (E&P) division. Although oil prices, which plummeted last quarter, have recovered, the actual selling price calculated based on the long-term average and the volume burden of oil fields will continue to keep the market weak.”

Recently, interest in green new deal beneficiary stocks and hydrogen-related industries has surged, leading to a rise in gas-related sectors (LNG, LPG) stock prices. However, Korea Gas Corporation is facing significant short-term performance burdens. Researcher Son Ji-woo said, “The stock price turned bearish because concerns about short-term performance were reflected. The company's performance is linked to oil prices, which is the opposite of the green new deal and the 4th industrial revolution, so there is a contradictory aspect to the recent stock price rise.”

It is judged that more time is needed before new businesses such as hydrogen economy infrastructure construction are reflected in performance. Researcher Jeong Hye-jeong explained, “New businesses such as LNG bunkering and hydrogen economy infrastructure construction are necessary processes considering the inevitable reduction of the tariff base, but since profitability has not yet become visible, their impact on stock prices and performance is limited.”

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