[Click eStock] "Korea Gas Corporation, Target Price Raised to 35,000 Won"

Meritz Securities on the 28th raised the target price for Korea Gas Corporation by 9% to 35,000 KRW. The investment rating was maintained as Buy.

Moon Kyung-won, a researcher at Meritz Securities, explained, "Due to the decline in natural gas prices, the increase in accounts receivable is expected to stop from the second quarter of this year," adding, "If the tariff hike begins smoothly after the general election, the price-to-book ratio (PBR) could reach as low as 0.35 times, the level seen before 2022."

However, he noted that delays in tariff increases and potential restructuring are risk factors.

The consolidated operating profit for the fourth quarter recorded 529.6 billion KRW, exceeding the consensus estimate of 387.3 billion KRW. Researcher Moon analyzed, "The market seems to have been concerned about a decrease in separate profits due to working capital settlements, but the related loss is estimated to be only around 100 billion KRW," adding, "However, there was a large impairment loss of 827.1 billion KRW in non-operating income."

He viewed the high uncertainty regarding distributable profits as regrettable. Researcher Moon said, "There is high sensitivity to exchange rates," and added, "Treasury shares (7.0%) were used for the issuance of existing perpetual exchangeable bonds (EB), making it difficult to use them immediately for shareholder returns."