[Click eStock] "Samchully, Expected to Achieve Record Annual Profit... Target Price Up"

[Asia Economy Reporter Kwon Jae-hee] Hana Financial Investment maintained a 'Buy' rating on Samchully on the 18th and raised the target price to 160,000 KRW.

Samchully's sales in the first quarter of this year reached 1.7499 trillion KRW, representing a 46.2% increase compared to the previous year. Separate sales increased due to the rise in city gas wholesale prices and sales volume, and although Espower's sales volume slightly decreased, its scale grew due to the strong System Marginal Price (SMP).

Operating profit recorded 87.7 billion KRW, improving by 17.8% year-on-year. The separate segment saw limited profit growth due to time lag effects despite improved sales volume, and the freeze on combined heat and power heat tariffs contributed to some cost increases. Power generation profits increased due to reduced fixed cost burdens from higher sales and improved heat sales revenue.

Yoo Jae-sun, a researcher at Hana Financial Investment, said, "Although SMP adjustments appeared in May, they are not expected to have a significant impact on the overall business environment," adding, "Considering the potential to secure price competitiveness compared to thermal coal, the second half performance is also expected to be positive."

Additionally, costs related to greenhouse gas emission permits are being reflected regularly, which is mitigating volatility. Non-operating income and expenses show a pattern of offsetting poor equity method income with improved financial income.

Researcher Yoo analyzed, "The reason for the small increase in performance despite the rise in separate sales volume is that the impact of increased purchase prices, which caused poor performance in the fourth quarter of last year, was also reflected this quarter," and added, "The wholesale price of natural gas supplied by Korea Gas Corporation surged, causing a time lag between costs and selling prices, which is expected to gradually resolve, and if realized in the future, it will result in additional profit improvement in the separate segment."