LS SECURITIES noted on the 14th that the Korea Gas Corporation's collection speed for receivables is sluggish, suggesting that the decision and intensity of potential rate hikes will be key factors for stock price trends. LS SECURITIES maintained a 'buy' investment opinion on Korea Gas Corporation with a target price of 50,000 won.
Korea Gas Corporation reported a consolidated revenue of 12.7327 trillion won and an operating profit of 833.9 billion won for the first quarter of this year. Revenue met market expectations, but the operating profit fell short by around 10%.
Researcher Seong Jong-hwa from LS SECURITIES explained, “The Australian business site among Korea Gas Corporation's overseas establishments has been underperforming due to falling oil prices and decreased acquisitions, leading to operating profits below expectations.”
While receivables for power generation and commercial gas are being collected quickly, the significant issue is with the receivables for residential city gas, which have been substantial. Although the amount has decreased, receivables of around 150 billion won continue to occur each quarter.
Researcher Seong stated, “Receivables from power generation, which had driven down the total receivables over the past five quarters, are expected to be mostly collected within the second quarter of this year,” adding, “If the residential city gas receivables do not enter the collection phase, the overall collection speed may significantly slow down or reverse to an increasing trend.”
Researcher Seong further mentioned, “Rate hikes are necessary to sustain the receivable collection phase,” stating that “the decision and intensity of rate hikes in the upcoming third quarter will be crucial for investing in Korea Gas Corporation.”