[Market Focus] Korea District Heating Corporation Surges Over 7% on Dividend Increase Outlook

Korea District Heating Corporation is showing strong performance on September 1. Investor sentiment appears to have improved due to expectations of increased dividends.

As of 2:58 p.m. on this day, shares of Korea District Heating Corporation were trading at 82,400 won on the Korea Exchange, up 7.15% from the previous trading day. The stock opened at 77,800 won and at one point during the session surged to as high as 83,300 won.

On this day, iM Securities projected that the dividend per share (DPS) of Korea District Heating Corporation would increase significantly, citing improved earnings and a higher payout ratio. Researcher Lee Sangheon stated, "Since there will be no scheduled preventive maintenance at the Daegu and Cheongju combined heat and power plants in the second half of this year, the foundation for improved earnings is expected to be established." He added, "As the Daegu and Cheongju plants have adopted Korea Gas Corporation's individual rate system, they are expected to maintain a high merit order among LNG power generators due to competitive procurement prices, leading to higher utilization rates and accelerating earnings improvement."

He continued, "This year, not only is profitability in the heat business segment becoming more visible due to lower costs and higher selling prices, but earnings in the power business segment are also expected to improve significantly thanks to higher utilization rates, resulting in an increase in net profit compared to last year." He also said, "In the first half of this year, 16.5 billion won in accounts receivable was collected compared to the end of last year, and with falling oil prices and other factors, accounts receivable and other receivables are expected to decrease, leading to an anticipated increase in the payout ratio to 25-30%."