KOGAS shares decline amid news of weak performance

[Courtesy of Korea Gas Corporation]

Korea Gas Corporation (KOGAS) saw its stock price decline on Wednesday morning amid reports of its deteriorating performance in 2023.

As of 9:24 a.m. on the Korea Exchange, KOGAS is trading at 28,450 won ($21.35), down by 4.05 percent from the previous closing price, and the stock dropped even further to 7.08 percent shortly after the market opened.

KOGAS announced a net loss of 747.4 billion won on a consolidated basis for the 2023 fiscal year the day before, marking a transition to negative territory, and operating profit also contracted by 36.9 percent to 1.55 trillion won.

Following the announcement, Mirae Asset Securities downgraded its investment opinion on KOGAS from ‘Trading Buy’ to ‘Neutral,’ citing uncertainties related to accounts receivable collection and dividend payment.

Mirae Asset Securities analyst Ryu Je-hyun commented on the company’s performance, saying, “KOGAS faced operational challenges in the fourth quarter of 2023 due to a decrease in sales volume amid economic downturn and a slump in liquefied natural gas (LNG) generation, impacting wholesale supply cost settlement.”

“The net profit demonstrated significant impairment losses of around 827.1 billion won domestically and internationally.”

Concerns about the increase in accounts receivable continued into 2024.

“Considering the ongoing rise in accounts receivable, an operating profit in the range of 2 trillion won is possible in 2024. However, the unresolved settlement of accounts receivable remains a risk factor, potentially leading to a deterioration in the financial structure,” Ryu said.

“The uncertainties surrounding dividends, coupled with the current stock price that is higher than global peers in similar industries based on EV/EBITDA metrics, initiates aggressive bottom fishing will be somewhat challenging.”