[Click eStock] "SK Gas, Profit Generation Potential Through Strengthened Price Competitiveness"

[Asia Economy Reporter Hwang Yoon-joo] Hana Securities analyzed on the 3rd that SK Gas may have profit-generating opportunities due to strengthened competitiveness resulting from the sharp rise in prices of other fuels. Accordingly, they maintained a 'Buy' investment rating and a target price of 160,000 KRW.

Yoo Seon-jae, a researcher at Hana Securities, stated, "While the volatility of major product prices has increased, causing significant fluctuations in quarterly earnings, an environment is being created where additional profit-generating opportunities may arise due to relatively strengthened price competitiveness from the sharp rise in prices of competing fuels."

Sales in the second quarter reached 1.9 trillion KRW, improving by 35.6% compared to the previous year. External growth was observed due to the rise in LPG prices. Operating profit was 57 billion KRW, an increase of 27.8% year-on-year.

Researcher Yoo explained, "Although sales volume decreased due to weak demand, profit improvement was possible thanks to favorable profitability-centered trading responding to market changes."

He added, "It is estimated that derivative trading profits were achieved due to strong LPG prices in April, but evaluation losses from the price weakening in May and June seem to have offset these factors. While this may vary depending on future LPG price trends, there is a possibility that remaining pre-reflected profits in the second half could be reversed into additional losses."

Meanwhile, SK Gas announced on July 21 that an interim dividend of 1,000 KRW per share was decided for the first time. The annual dividend will be determined based on the remaining performance in the second half of the year.

Researcher Yoo predicted, "Considering the reversal of losses from remaining pre-reflected profits in the future, pre-tax profit in the second half may decline, but taking into account a dividend payout ratio of 20-40% based on separate net profit, the annual DPS scale is expected to be maintained."