Korea Gas Corporation, Outstanding Stability... What About This Year's Dividends?

Meritz Securities "Last Year's Dividend at 1,200 Won Expected to Rise to 2,000 Won This Year"

[Asia Economy Reporter Gong Byung-sun] Korea Gas Corporation is expected to improve its profits starting this year amid rising interest rates and raw material prices. The dividend this year is also likely to increase compared to the previous year.

On the 22nd, Meritz Securities estimated Korea Gas Corporation's sales for the fourth quarter of last year at 8.1839 trillion KRW, a 52.1% increase compared to the same period last year, and operating profit at 341 billion KRW, a 31% increase over the same period. The operating profit was 18.75% below the market consensus. It is interpreted that the inability to operate Australia's Prelude due to a small fire last month affected the performance.

However, Korea Gas Corporation's profits are expected to show stability going forward. While other stocks are shaken by rising interest rates and raw material prices, these factors are expected to improve Korea Gas Corporation's profits. Moon Kyung-won, a researcher at Meritz Securities, forecasted, "The start of production at Mozambique Coral Floating Liquefied Natural Gas (FLNG) facilities and hydrogen business in the fourth quarter of this year will act as additional growth momentum."

This year's dividend is also a positive factor for investors. The dividend, expected to be 1,200 KRW last year, is anticipated to increase to 2,000 KRW this year due to a reduction in foreign exchange losses. Researcher Moon explained, "Foreign exchange losses exceeding 200 billion KRW occurred last year, but if there are no more foreign exchange losses this year, pre-tax profit alone could increase by nearly 60%. The appropriate post-tax investment return is also expected to increase by 14.6% compared to the same period last year, supported by the rate base due to rising interest rates and increased working capital." Additional dividend resources that can be expected this year include dividends from Iraq's Zubair and sales from the Iraq Akkas gas field.

Accordingly, Meritz Securities maintained its investment opinion of 'Buy' and target price of 55,000 KRW for Korea Gas Corporation. The closing price on the previous day was 35,150 KRW.