Photo = Korea Gas Corporation

 

[Alpha Biz= Reporter Kim Sangjin] On the 3rd, Daishin Securities announced an increase in the target price for Korea Gas Corporation from ₩51,000 to ₩66,000.

This adjustment reflects the anticipated positive impact of the August increase in residential gas prices, recent stabilization of oil prices and exchange rates, and the expected interest rate cut in October. Daishin Securities forecasts that Korea Gas Corporation’s receivables will not rise in Q4 2024 as previously expected.

The firm predicts that the company's receivables, which stood at ₩15.8 trillion at the end of last year, will decrease to ₩14.4 trillion by the end of 2024, ₩14.2 trillion by the end of 2025, and ₩13.9 trillion by the end of 2026. They also note the possibility of additional receivable recovery if oil prices do not rise beyond current estimates.

The government recently raised residential gas prices by ₩10.4 per MJ. Meanwhile, international oil prices, which are closely related to the cost of city gas in Korea, have declined.

Daishin Securities explains that a $1 per barrel decrease in oil prices would reduce the cost of gas procurement by ₩82 billion, and a ₩10 decrease in the exchange rate would cut costs by ₩53 billion. Additionally, a 0.5% point reduction in interest rates would lower this year’s interest expense on receivables from ₩619 billion to ₩515 billion.

However, the firm has reserved its judgment on the East Sea gas field project issues, noting that it is difficult to estimate Korea Gas Corporation’s investment and gas discovery volumes, and thus cannot reflect these concerns in the valuation.

 

 

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