[Click eStock] "Korea Gas Corporation, Earnings Expected to Improve Due to Oil Price Rise and Restart of Australian Operations"

Hana Financial Investment Report
Target Price Up 26% from Previous... 44,000 Won

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on Korea Gas Corporation on the 14th and raised the target price by 25.7% from the previous level to 44,000 KRW. This reflects the possibility of deficit reduction due to rising oil prices and the resumption of the Australian Prelude project.

The fourth-quarter earnings are expected to fall short of market expectations. Sales are projected to decrease by 30.7% year-on-year to 4.8 trillion KRW. Although gas sales volume increased by 4.8% compared to a year ago due to lower temperatures and changes in the power mix, sales revenue is expected to have declined due to weak selling prices.

Operating profit is estimated to have decreased by 23% during the same period to 323 billion KRW. This appears to reflect poor overseas performance, a decline in the overall cost allocation ratio, and the impact of adjustments to the appropriate investment return. Considering that the oil price rebound began in December last year, poor overseas performance is expected to continue through the first quarter.

Researcher Jaeseon Yoo of Hana Financial Investment said, "Since last year's sales performance fell short of the target and LNG prices also declined, an adjustment of working capital reflected in the appropriate investment return is expected, which is a factor reducing separate profit."

However, from the first quarter of this year, the deficit is expected to narrow compared to the previous year due to the resumption of the Prelude project. The overall cost allocation ratio is lower than the previous year, so a decrease in separate profit is also expected. In addition, factors that suppressed Korea Gas Corporation's performance last year, such as weak oil prices, falling interest rates, and decreased sales volume, are expected to be mostly resolved this year.

Researcher Jaeseon Yoo said, "Its role as a cyclical stock within the utility sector will be highlighted," adding, "If a long-term roadmap related to the hydrogen industry, which has high market expectations, is announced, it will have a positive effect on the stock price."

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