[Click eStock] "Korea Gas Corporation Lowers This Year's Operating Profit Forecast... Target Price Down"

On the 14th, Samsung Securities announced that it would lower its operating profit estimate for Korea Gas Corporation by 23% this year. It maintained its investment rating as 'Buy' and lowered the target stock price to 36,000 KRW.

Kim Young-ho, a researcher at Samsung Securities, explained, "The second quarter sales and operating profit recorded 8.1 trillion KRW and 205 billion KRW respectively, down 8.2% and 29.1% year-on-year, meeting market expectations," but added, "Sales volume sharply declined by 12.7% compared to last year, resulting in negative sales growth."

The second quarter sales volume was 6.75 million tons, a sharp decrease of 12.7% year-on-year. Sales volume for city gas fell to 3.24 million tons due to reduced demand following price hikes, down 8.9% compared to the previous year.

Meanwhile, sales volume for power generation was 3.51 million tons, down 16% year-on-year due to increased direct import volumes and decreased peak power generation. On the other hand, sales prices rose by 6.1% year-on-year for city gas sales prices following a price increase in May, pushing the overall sales price up by 3.2% to 1,135.5 KRW/ton.

Researcher Kim stated, "Reflecting changes in oil prices and sales volume estimates, we lowered the 2023 operating profit estimate by 23%," and explained, "Applying a price-to-book (P/B) multiple of 0.32x, which is the average over the past two years during which accounts receivable increased, we lowered the target stock price by 7.7%."

He added, "Due to the downward stabilization of oil prices, a decrease in accounts receivable is expected, and considering the historically low valuation levels, we maintained the investment rating as 'Buy.'"

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