[Click eStock] "SK Gas, 1Q Sales Performance Improvement... Expected Expansion of Business Opportunities"

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment maintained its buy rating and target price of 160,000 KRW for SK Gas on the 10th, citing that the company's operating profit in the first quarter of this year exceeded market expectations and sales performance improved.

SK Gas recorded sales of 2.4 trillion KRW in the first quarter of this year, up 63.9% from the previous year. This was influenced by increased selling prices due to rising oil prices and improved sales performance. Sales volume increased significantly as relative price competitiveness improved. Additionally, overseas trading volumes improved, and supply to agencies and industrial customers also increased.

Operating profit for the first quarter was 105.7 billion KRW, up 181.1% year-on-year. This was due to increased industrial sales volume and LPG trading performance. It is predicted that domestic liquefied natural gas (LNG) prices rose, leading to increased substitute demand during the winter season. Pre-tax profit recorded 184.8 billion KRW, up 139.4% year-on-year, due to pre-recognized gains related to derivatives. Researcher Yoo Jae-sun of Hana Financial Investment explained, "However, there is a possibility of a temporary decline in performance in the second quarter of this year as actual losses will be reflected later."

Furthermore, based on the first quarter results, a favorable dividend policy is expected to continue. Researcher Yoo said, "Based on the dividend policy presented last year, an interim dividend is scheduled to be confirmed in July," adding, "Although the total dividend amount will be finally decided after confirming the annual performance, considering the strong first quarter results, it is judged that at least the dividend level of 2021 can be expected on an annual basis."

He added, "Although actual losses from derivatives will gradually be reflected from the second quarter, the expansion of business opportunities due to strong LNG prices will lead to fundamental performance improvement, which is expected to offset such concerns."

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