By Park Hyong-ki
Staff Reporter
Shares of Korea Gas Corp. (KOGAS) reached a record high during trading Friday on solid fundamentals.
Analysts are positive that its shares will rally further, driven by bright prospects of its energy development projects and privatization.
KOGAS shares ended up 6.56 percent, or 5,100 won, at 82,800 won. Its shares hit as high as 83,000 won during the day.
It posted an operating profit of 589 billion won in the first quarter of this year, up 30 percent from a year ago, outperforming the market consensus. The company attributes the rise to increased supply margins and sales. Its sales volume of gas recorded 9.6 million metric tons, up 16 percent.
Besides healthy fundamentals, its natural gas development projects, backed by the government, are likely to boost its shares going forward.
``Such projects in Iraq, Central Asia and Australia are expected to pick up steam in the latter half of this year, which will buoy its shares,'' said Lee Chang-mok, an analyst of Woori Investment & Securities, forecasting its shares to hit 97,000 won.
A privatization plan for KOGAS by the Ministry of Knowledge Economy is also arousing investor sentiment.
The ministry is considering transforming KOGAS into an energy holding company by merging with Korea National Oil Corp. (KNOC), as part of its privatization plans for the gas firm. KOGAS is the biggest among state-run oil and gas companies.
The amalgamation between the gas company and KNOC will create a giant energy corporation with assets of over 22 trillion won.
The government is expected to finalize its plans by the end of June. However, its initial plan is to create a giant holding company through the privatization of the gas company; acquire several overseas oil and gas companies; and become one of the world's top 50 energy firms.
``Given that the incumbent government is emphasizing energy development for economic growth, the implementation of the plan will positively affect KOGAS shares,'' said Joo Ick-chan, an analyst of Hana Daetoo Securities. He expects its shares to reach as high as 100,000 won within a year.
Although the government is unlikely to fully privatize the gas corporation given its growth potential, analysts still remain optimistic about its shares. The government owns a 62 percent stake in KOGAS.
phk@koreatimes.co.kr