[Click eStock] Korea Gas Corporation Forecasts 'Net Profit Surplus' Last Year

[Asia Economy Reporter Junho Hwang] Shin Young Securities on the 24th set the target price for Korea Gas Corporation at 47,000 KRW.

Last year, sales and operating profit are expected to reach 2.7 trillion KRW and 1.3 trillion KRW, respectively, marking increases of 32.0% and 43.3% compared to the previous year. In 2020, net profit was impaired due to large-scale impairment losses, but from last year, as oil prices normalized and one-time factors in overseas businesses disappeared, the risk of large-scale impairment losses is expected to be resolved for the time being. Accordingly, net profit is projected to increase by 2.3% year-on-year to 638.6 billion KRW.

In particular, Korea Gas Corporation implements a raw material cost linkage system, reflecting oil price fluctuations in wholesale rates, thereby maintaining a stable profit generation structure. Regarding natural gas sales volume, sales of natural gas for city gas are expected to remain similar to the past, while sales of natural gas for power generation are expected to continue increasing. The main reason is that LNG is suitable as a substitute for coal.

Researcher Deokmin Kwon of Shin Young Securities stated, "Although a net loss was inevitable in 2020 due to the low oil price crisis, oil prices have shown an upward trend since 2021, and it is judged that no large-scale impairment losses will occur related to ongoing overseas projects," adding, "Net profit in 2021 is expected to record 638.6 billion KRW, enabling a return to profitability."