[Click eStock] "Jiyok Nanbang Gongsa, Profit Improvement Trend Expected to Continue in Q1"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment on the 16th presented a 'Buy' investment opinion and a target price of 60,000 KRW for the Korea District Heating Corporation, stating that the profit improvement trend continuing from the fourth quarter of last year is expected to persist into the first quarter of this year.

Yoo Jaeseon, a researcher at Hana Financial Investment, said, "Through the fourth quarter results of last year, we were able to confirm a normalized profit level," adding, "It is judged that profit improvement was possible due to the overall reduction in fuel costs influenced by weak oil prices, along with the normalization of heat tariffs and an increase in heat sales volume." He analyzed that the heat sales volume likely increased significantly, as evidenced by a 22.6% year-on-year increase in city gas sales volume in January, when heating demand is highest.

Sales in the fourth quarter of last year recorded 608.5 billion KRW, a 10.5% decrease compared to the previous year. The heat sector saw a 12.0% increase in sales volume and a rise in sales price. In contrast, the electricity sector experienced a 1.2% decrease in sales volume and a decline in sales price, resulting in somewhat sluggish performance. Operating profit was 65.1 billion KRW, an 86.5% increase year-on-year. The decline in LNG prices for power generation led to a simultaneous decrease in the scale and cost of the electricity sector, but a fundamental increase in profit margin was observed due to the normalization of heat tariffs.

The profit improvement confirmed in the fourth quarter results of last year is expected to continue into the first quarter of this year. Researcher Yoo Jaeseon stated, "Due to the recent rise in oil prices, cost burdens are expected to increase from the second quarter," adding, "Since the improvement in sales volume and the resulting profits due to the cold wave in the winter season will be concentrated in the first quarter, the performance trend can continue."