[Click eStock] "Samchully, Focus on Net Profit Improvement Trend... Target Price Up"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment maintained a 'Buy' rating on Samchully on the 26th, emphasizing the improvement in net profit, and raised the target price by 20% from the previous level to 120,000 KRW.

Yoo Jaeseon, a researcher at Hana Financial Investment, stated, "In the first quarter results, city gas demand increased due to low winter temperatures and the base effect of COVID-19," adding, "If the retail price adjustment this year results in at least a freeze or better, annual performance stability can be secured." He explained that in power generation, as the System Marginal Price (SMP) rises and the proportion of base load power generation stagnates, the recovery in utilization rate is expected to partially offset the impact of fuel cell shutdowns.

The operating profit in the first quarter of this year was 74.4 billion KRW, up 15.4% year-on-year. During the same period, sales increased by 2.8% to 1.1971 trillion KRW. Although the decrease in wholesale prices and the decline in SMP for SPower reduced the scale, consolidated sales increased year-on-year due to higher sales volume of Samchully Motors and increased construction sales of Samchully ES. Operating profit was 74.4 billion KRW, up 15.4% year-on-year.

Researcher Yoo said, "City gas sales volume continued to decline in the general-use sector, but its low proportion meant the impact was not significant," adding, "On the other hand, demand recovery for residential and fuel cell use was remarkable." He analyzed that the drop in temperature generally contributed to the increase in sales volume.

Yoo also said, "The steady increase in fuel cell demand is expected to be confirmed due to the normalization of Gyeonggi Green Energy operations and the increase of new facilities within the supply area." Although SPower's utilization rate improved, it is expected to see a slight decrease in profit compared to the previous year due to weak SMP and downward adjustment of capacity charges.

Along with the potential for highlighting net profit stability this year, the dividend policy going forward is considered important. Despite an increase in operating profit last year, pre-tax profit actually decreased due to refinancing fees for SPower, equity method losses from changes in useful life of Gyeonggi Green Energy, and one-time impairments related to fuel cell LTSA.

However, this year, the various one-time costs that appeared last year are expected to act as a base effect, leading to a significant increase in net profit. Researcher Yoo said, "With a return on equity (ROE) of over 5% and an expected dividend per share (DPS) of 3,000 KRW, the dividend payout ratio is only about 15%, so there is potential for an upward revision."

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