[Click eStock] "SK Gas, Ulsan GPS Profit Expansion Expected... Target Price Up"

Target Price Raised by 14% Compared to Previous Level

On the 16th, NH Investment & Securities raised the target price for SK Gas from 220,000 KRW to 250,000 KRW, anticipating an expansion in profits from Ulsan GPS. The investment rating was maintained at 'Buy.'

Lee Min-jae, a researcher at SK Securities, stated, "The target price increase is due to a 13% rise in the 12-month moving average EBITDA, reflecting the profit expansion of Ulsan GPS." He added, "Since Ulsan GPS is a new combined cycle power plant, it is expected to have an advantage over other combined cycle plants in terms of system marginal price (SMP) determination by time zone. Despite the continuous SMP decline since October, favorable input costs and high efficiency are expected to improve pre-tax profits by more than 30 billion KRW compared to the previous estimate of 200 billion KRW." The generation capacity of combined cycle plants operating before 2010 accounts for about 43% of total facilities, or 19.4 GW, with generation costs over 10% higher than those of new plants.

Additionally, SK Gas and SK Eteonics plan to install a 200 MWh energy storage system (ESS) in the Texas area of the United States and sequentially commence commercial operations from the end of the year. "The ESS capacity is planned to increase to 1 GWh in the mid to long term, and with the current time-of-use price differences, profitability should be sufficient," he said.

From next year, the effects of a full-scale shareholder return policy are expected. SK Gas plans to actively implement value-up measures through its shareholder return policy. The researcher said, "Basically, more than 25% of the consolidated controlling shareholder net profit will be paid as dividends, and if the mid to long-term target return on equity (ROE) exceeds 12%, additional returns will be made through cash dividends or treasury stock policies." He forecasted, "The dividend per share (DPS) based on controlling shareholder net profit in 2025 is 11,000 KRW, and with an ROE of 14.7%, it will meet the criteria for additional returns."