[Click e-Stock] "SGC Energy Target Price Raised on Expanded REC Issuance and Data Center Operations"

Hana Securities announced on the 4th that it is maintaining its Buy investment rating on SGC Energy and raising its target price to 40,000 won.

Yu Jaeseon, a researcher at Hana Securities, analyzed, "Steep growth is expected through 2030, driven by an increase in the issuance of Renewable Energy Certificates (RECs), the conversion to a district electricity business, and the expansion of data center operations and power supply," adding, "First, until 2027, profit growth of more than 30 billion won will be possible thanks to higher REC issuance resulting from an increase in REC weighting, and during this period, the conversion to a district electricity business will allow the company to supply power at prices higher than the System Marginal Price (SMP), creating room for additional profit growth of up to 50 billion won."

He continued, "The data center business is a project carried out in cooperation with domestic telecom operators and securities firms on the SGC Green Power site, starting at 40MW, with construction to begin this year and trial operation and commercial operation targeted for 2028," and added, "While a phased expansion up to a maximum of 300MW is planned, new investments in power generation facilities will proceed in parallel, and earnings contributions through engineering, procurement, and construction (EPC) in the construction and real estate segment are also possible."

Researcher Yu pointed out, "Fourth-quarter revenue last year came in at 624.8 billion won, down 3.6% year-on-year, as electricity revenue declined due to a drop in SMP and lower power generation, but the increase in REC contracted supply volumes offset the decline," and noted, "In the construction and real estate segment, overseas plant construction has entered a full-scale phase, allowing the company to maintain a stable trend."

He went on to say, "Fourth-quarter operating profit last year was 18.8 billion won, down 28.1% year-on-year, largely due to the manufacturing segment swinging to a loss and a decline in the profit margin of the power generation segment," but added, "Considering the rise in emissions allowance prices, this could become a driver of profit growth over the medium to long term."

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