The state utility company, Korea Gas, witnessed a decline in its shares following the release of disappointing quarterly results, resulting in its first annual net loss in three years.
Financial Performance
The South Korean natural gas supplier experienced a 4.9% decrease in its shares to 28,200 won ($21.17) amid a 0.9% gain in the stock benchmark Kospi.
The company reported a net loss of KRW747.43 billion for 2023, marking a significant shift from two consecutive years of profits. This decline was attributed to lower prices and sales in their natural gas products, increased debt financing costs, and wider impairment losses for assets overseas.
Challenges and Outlook
The increase in long-suppressed tariff rates led to higher borrowings and interest payments, impacting the overall financial performance. However, analysts predict that one-off costs and reduced business expenditures may lead to improvements in earnings for the company in 2024.
Shinyoung Securities analyst, Kwon Duk-min, states that he expects Korea Gas to return to net profitability in 2024, with a projected 29% rise in operating profit. With a target price of KRW40,000 and a buy rating on the stock, there is optimism for a turnaround in the upcoming year.
It will be interesting to see how Korea Gas navigates these challenges and aims to regain profitability moving forward.