[Click eStock] Korea Gas Corporation, Tailwind Until Next Year "Target Price Raised"

[Asia Economy Reporter Lee Seon-ae] On the 31st, KB Securities announced that it has upgraded its investment opinion on Korea Gas Corporation from 'Hold' to 'Buy' and raised the target price from 45,000 KRW to 58,000 KRW. This adjustment is due to the upward revision of operating profit forecasts, supported by higher oil prices and interest rates.

Jung Hye-jung, a researcher at KB Securities, explained, "Reflecting the increased appropriate investment return and improved performance of overseas blocks due to higher oil prices and interest rates, we have raised the operating profit forecasts for 2022-2024 by an average of 20.7%. The expected operating profits for 2022 and 2023 are each 3.5% and 3.6% above market consensus."

Korea Gas Corporation's consolidated sales for the second quarter of this year are estimated to reach 8.4 trillion KRW, a 72.8% increase compared to the same period last year, and operating profit is expected to be 122.5 billion KRW, up 125.7%.

Researcher Jung stated, "Operating profit will significantly increase compared to the same period last year due to the rise in appropriate investment return and improved profitability of overseas subsidiaries, but it is expected to fall short of the market average forecast. Working capital has increased due to higher oil prices, raising the tariff base by 19%, and the appropriate investment return rate also rose by 0.4 percentage points due to last year's interest rate hike."

It is anticipated that Korea Gas Corporation's profit improvement will continue from the second half of this year through next year. She said, "The recent macro environment will have a positive effect on Korea Gas Corporation. Interest rates will contribute to the rise in the appropriate investment return rate next year, and the increased oil prices along with the start of commercial production in the Mozambique block will contribute to the profit growth of overseas subsidiaries." She added, "Although there is a possibility of foreign exchange translation losses due to the year-end exchange rate increase, some of this may be offset by the reversal of impairment losses on the Prelude block at the end of this year."

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