[Click eStock] "Samchully, Short-term Slump Due to Urban Gas Rise... Normalization Expected This Year"

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment maintained a buy investment opinion and a target price of 120,000 won for Samchully on the 17th, stating that although the company recorded short-term performance decline due to the rise in the purchase price of city gas in the fourth quarter of last year, normalization is highly likely this year.

Samchully's sales in the fourth quarter of last year reached 1.2044 trillion won, up 48.2% compared to the previous year. Although household city gas sales volume decreased, demand in other uses recovered, leading to an overall improvement in sales performance.

Operating loss turned to 12.9 billion won, with the rise in city gas purchase price and the cost increase of Gwangmyeong combined heat and power being evaluated as causes of the performance decline.

Yoo Jae-sun, a researcher at Hana Financial Investment, explained, "Power generation's fundamental profit-generating ability is improving due to the rise in SMP (System Marginal Price) and increased electricity sales volume, but profits decreased as the purchase cost related to greenhouse gas emission rights was reflected," adding, "Since the upward trend of SMP is expected to continue after the first half of this year, positive market conditions are anticipated."

Researcher Yoo added, "Although a decrease in operating performance was confirmed due to various temporarily occurring cost issues, normalization is highly likely this year," and "since non-operating expenses have also entered a range where stable management is possible, the trend of net profit improvement is expected to continue for the time being."