[Click e-Stock] "Korea Gas Corporation Requires a Long-Term Approach"

Daishin Securities stated that, since an increase in city gas rates is expected only after the local elections in June next year, a long-term approach is necessary for Korea Gas Corporation. The brokerage maintained its "Buy" investment rating and a target price of 52,000 won.

On December 17, Heo Minho, a researcher at Daishin Securities, explained, "The dividend payout ratio for 2025 is expected to rise to 25%, up from 16% the previous year. Accordingly, the dividend per share is projected at 1,900 won, with a dividend yield of 4.5%. The price-to-book ratio stands at 0.34 times, and considering that most negative factors have already been reflected in the share price, the stock is likely to show downside rigidity."

Heo emphasized, "The prerequisite for a stock price increase is the collection of accounts receivable. For this to happen, a city gas rate hike is necessary, which is expected to be possible only after the local elections in June 2026."

Heo forecasted Korea Gas Corporation's fourth-quarter operating profit at 694.1 billion won, a 41% decline compared to the same period last year. This is because, in the fourth quarter of last year, the domestic gas wholesale business benefited from cost adjustments and other reversals, resulting in a high base effect that led to a drop in operating profit this year. Additionally, the overseas business underperformed due to falling oil prices.

Heo added, "Even after 2026, profit growth in the gas wholesale business will be difficult. However, we expect stable annual operating profits of between 1.85 trillion and 1.9 trillion won to continue. For the overseas E&P business, unless there is a further decline in oil prices, performance is expected to improve due to the impact of the Canada BC LNG project."

The Canada BC LNG project recognizes tolling fees for liquefaction services as revenue, which is not linked to oil prices. Related operating profit is expected to reach 70 billion won in 2026 and 120 billion won in 2027.