[Click eStock] "Korea Gas Corporation, Expectation for Expansion in Hydrogen-Related Business... Target Price Up 10%"

[Asia Economy Reporter Park Jihwan] Shinhan Financial Investment stated on the 13th that Korea Gas Corporation is passing through the worst phase of its performance, and it is a time when expansion of hydrogen-related businesses such as raw material procurement and hydrogen distribution, which are growth drivers, is expected. Accordingly, they maintained a 'Buy' investment rating and raised the target price by 10% from the previous 30,000 KRW to 33,000 KRW.

Jung Yongjin, a researcher at Shinhan Financial Investment, said, "Q3 sales were 3.4 trillion KRW, and operating loss was 223.7 billion KRW, continuing in a deficit state," adding, "this is a record where sales were 9% below market expectations and operating loss slightly larger."

City gas sales were 1.5 trillion KRW, affected by an overall decrease in demand, and power generation sales were 1.7 trillion KRW, continuing sluggishness due to increased direct import power generation, he analyzed. Overseas resource development, except for Australia's GLNG/Prelude, is recovering from the worst performance recorded last quarter. He explained that combined sales were 216.4 billion KRW and operating profit was 19.7 billion KRW, escaping deficit in just one quarter.

The directions of key external variables affecting performance are all evaluated as favorable. Researcher Jung said, "Improvement is underway due to rising oil prices and interest rates, and a decline in the KRW-USD exchange rate," adding, "However, since a large rebound in oil prices is not expected, it is necessary to lower expectations to gradual improvement in the overseas resource development sector and the eventual end of additional impairment recognition."

Researcher Jung added, "From a mid- to long-term perspective, it is necessary to consider inorganic growth through expansion of the hydrogen business," and "Extracted hydrogen, the initial key raw material of the domestic hydrogen economy, is inevitably linked to the LNG infrastructure, which the company holds a near-monopoly on."