[Click eStock] Korea Gas Corporation, Growth Blueprint with Mid- to Long-Term Hydrogen Business

Set a Target of 3 Trillion KRW Operating Profit by 2030

[Asia Economy Reporter Minwoo Lee] Korea Gas Corporation announced the direction and goals of its mid- to long-term hydrogen business, forecasting an operating profit of 3 trillion won by 2030. While expanding its fuel cell business, it is also expected to create new demand through the co-firing of liquefied natural gas (LNG) and hydrogen.

On the 28th, Eugene Investment & Securities maintained its 'Buy' rating on Korea Gas Corporation against this backdrop and raised the target price by 67% to 60,000 won. The closing price the previous day was 41,850 won.

The day before, Korea Gas Corporation declared its 'Vision 2030' and announced the direction and goals of its mid- to long-term hydrogen business. The core plan is to supply 1.03 million tons of hydrogen (53% market share) by 2030, participate in the fuel cell power generation business, and advance as an eco-friendly company through hydrogen co-firing and distribution.

The hydrogen supply of 1.03 million tons consists of 670,000 tons of gray hydrogen (natural gas reforming), 170,000 tons of blue hydrogen (utilizing carbon capture, utilization, and storage), and 200,000 tons of green hydrogen (water electrolysis using renewable energy). To transition to green hydrogen necessary for long-term carbon neutrality, the company plans to build 17 gigawatts (GW) of renewable energy capacity by 2030. Researcher Seonghyun Hwang of Eugene Investment & Securities explained, "The fuel cell business, which was initially targeted at 500 megawatts (MW), has been expanded to 1 GW, and the explicit mention of new demand creation through LNG and hydrogen co-firing is significant."

Through this plan, Korea Gas Corporation declared its goal to achieve an operating profit of 3 trillion won by 2030. It is estimated that the targets will be set at 1 trillion won from domestic natural gas wholesale, 1 trillion won from overseas resource development, and 1 trillion won from hydrogen. The natural gas wholesale business is expected to maintain a stable annual profit level of 1 trillion won due to low performance volatility and limited additional investment scale. Regarding overseas resource development, considering the recent rise in raw material prices, increased production at the Jubair oil field, and the new operation of the Mozambique gas field, it is analyzed as sufficiently achievable.

The hydrogen business target was also evaluated as reasonable. Researcher Hwang said, "Depending on whether the operating profit and equity method are reflected from the fuel cell power generation business promotion, and the specific facility capacity of distribution and charging businesses, assuming a sales volume of 1.03 million tons and a price of 6,000 won per kilogram in 2030, it is estimated that the company is aiming for an operating profit margin of 4-5%, which corresponds to an appropriate investment return rate. It appears that achieving the goal will be possible depending on future facility scale, natural gas price fluctuations, and the decline in renewable energy generation costs, and if profitability improves, there is also a sufficient possibility of transitioning to a regulated business."