KOGAS Hits 52-Week High... Dual Boost from Hydrogen and Oil Prices

Rising Oil Prices Boost Profitability of Overseas Resource Development Projects
Growing Expectations for Leading Hydrogen Distribution Business

Exterior view of the Korea Gas Corporation headquarters building

[Asia Economy Reporter Minwoo Lee] The stock price of Korea Gas Corporation is hitting new 52-week highs day after day, approaching the 40,000 won mark for the first time in two years. This is interpreted as a double positive effect, with expectations that the overseas resource development business will proceed smoothly due to rising international oil prices, and growing interest in the hydrogen sector highlighting the company's capabilities in the related liquefied natural gas (LNG) business.

At 9:03 a.m. on the 8th, Korea Gas Corporation's stock price recorded 39,800 won, up 2.84% from the previous day. It surpassed the 52-week high of 38,800 won recorded during trading the day before, in just one day. This contrasts with the sideways movement in the mid-30,000 won range until last month this year. The upward trend began at the end of last month. Since May 25, the stock price has steadily risen, increasing by about 23% until the previous day. This is nearly ten times the KOSPI's 2.54% rise during the same period.

The rise appears to be influenced by growing expectations of improved earnings due to the increase in international oil prices. Korea Gas Corporation's earnings consist of domestic gas business guaranteed by the government and overseas resource development business linked to oil prices. The regulated domestic gas business is generally linked to interest rates, while the non-regulated overseas resource development business ultimately determines overall profit and loss based on international oil prices. The average price of West Texas Intermediate (WTI) crude oil in May was $66.6 per barrel, exceeding previous forecasts, and during trading the day before, it surpassed $70 for the first time since October 2018. Yongjin Jung, chief researcher at Shinhan Financial Investment, explained, "Since the overseas resource development business is highly dependent on oil prices, the recent oil price trend will positively affect Korea Gas Corporation's earnings growth momentum."

The hydrogen-related business is also considered a positive factor. Recently, Korea Gas Corporation was selected by the Ministry of Trade, Industry and Energy as the 'dedicated hydrogen distribution agency.' Going forward, the company plans to establish large-scale hydrogen production bases, fuel cell power complexes, and hydrogen charging stations domestically, as well as renewable energy power complexes and water electrolysis facilities overseas. Minjae Lee, a researcher at NH Investment & Securities, said, "The core of the hydrogen distribution business is the capability to handle large-scale LNG, and Korea Gas Corporation, as a market-type public enterprise and the world's largest LNG operator, possesses land, capital, technology, and purchasing power." He added, "Although there may be differing opinions on profitability because the government aims to reduce hydrogen distribution costs, economies of scale will naturally resolve this issue."

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