[Click eStock] "Korea Gas Corporation, Expected Benefits from Oil Price Rebound and Hydrogen Economy"

[Asia Economy Reporter Ji-hwan Park] Korea Investment & Securities on the 1st highlighted the need to focus on the rebound in oil prices next year and the long-term benefits of the hydrogen economy for Korea Gas Corporation, recommending a 'Buy' rating and a target price of 36,000 KRW.

Choi Go-woon, a researcher at Korea Investment & Securities, stated, "The harsh year of 2020 for Korea Gas Corporation is coming to an end," and forecasted, "Next year will be a time when expectations for an oil price rebound and momentum in the hydrogen economy will outweigh additional risks."

This year, the biggest blow to the gas corporation's investment sentiment was the decline in oil prices. In the second quarter, impairment losses exceeding 400 billion KRW were reflected in overseas operations, and in the third quarter, the GLNG project, in partnership with Prelude in Australia, recorded an operating loss.

With international oil prices rising more than 10% in the fourth quarter, additional resource development risks are expected to be limited. Researcher Choi analyzed, "Short-term stock momentum remains valid depending on the speed of oil price recovery and the normalization of Prelude's production."

In power and gas industry investments, policy direction is the most decisive factor, followed by the impact of external variables such as oil prices, according to Researcher Choi. The government announced in October plans to reform the natural gas supply system for hydrogen production. This is seen as an opportunity for the long-term increase in LNG demand and a reevaluation of the role of the gas corporation.

Researcher Choi emphasized, "Although policy support is concentrated on the renewable energy industry since the Green New Deal, there are limits to renewable energy growth if Korea Gas Corporation and Korea Electric Power Corporation (KEPCO) do not support the market as market makers."