[Click eStock] "Korea Gas Corporation, Expected to Collect Outstanding Payments Starting July"

Daishin Securities analyzed on the 11th that Korea Gas Corporation has potential for stock price growth even without considering the benefits from the Donghae gas fields. The target stock price was raised from the previous 37,000 KRW to 51,000 KRW.

Heo Min-ho, a researcher at Daishin Securities, stated, "The stock price of Korea Gas Corporation rose 38% after announcing exploration drilling plans for Donghae Block 8 and Block 6-1 on the 3rd," explaining, "This was because the historically lowest valuation situation and the expectation of benefits from successful gas development acted as momentum to resolve undervaluation."

He added, "If economically viable gas and oil reserves are confirmed in Donghae, Korea Gas Corporation can consider various ways to participate in the projects. Confirmation of reserves and establishment of investment plans must precede to estimate the level of corporate value improvement through the Donghae blocks."

Researcher Heo also said, "Although the recent stock price surge was indeed driven by the Donghae gas field issue, there is undervaluation appeal from a fundamental perspective as well," analyzing, "Factors such as earnings normalization, the start of receivables collection in July, and dividend attractiveness should be considered."

Furthermore, he explained, "The raw material cost for residential city gas in June was set at 16.67 KRW/MJ, which is lower than the 17.83 KRW/MJ for industrial use gas prices where the raw material cost linkage system is properly implemented." He emphasized, "If the raw material cost for residential city gas next month is increased by 15% excluding oil price fluctuations, some of the receivables can be recovered."

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