KOSPIEnergy & Power036460

KoreaGasCorporation

₩35,900▲ 1.84%2026-10-02 close

Market Cap

₩3.3T

Turnover

₩6.9B

Volume

190,000 shares

Shares out.

92.3M

PER

5.5×

PBR

0.3×

EPS

₩6,438

Dividend Yield

3.29%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,154 per share · Prices as of the 2026-10-02 close

Report overview

Unrecovered Costs vs Overseas LNG Profits

A domestic wholesale gas monopoly and expanding overseas LNG upstream profits are lifting earnings, while unrecovered residential cost balances in the mid-13 trillion won range and a debt-to-equity ratio near 400% remain the weight on the balance sheet.

1
First-quarter 2026 revenue was 11.80 trillion won with operating profit of 910.0 billion won, and second-quarter revenue was 7.51 trillion won with operating profit of 675.3 billion won, giving first-half operating profit of about 1.59 trillion won.
2
For 2025, revenue was 35.73 trillion won and operating profit 2.10 trillion won (5.9% operating margin), but a fourth-quarter net loss of 406.9 billion won attributable to owners cut full-year net income to 133.0 billion won.
3
Operating cash flow swung from negative 14.58 trillion won in 2022 to positive 6.54 trillion won in 2025, and the debt-to-equity ratio fell from 499.6% in 2022 to 396.6% in 2025.
4
The company reported that residential city-gas unrecovered cost balances stood at 13.54 trillion won as of the second quarter of 2026, up 167.3 billion won from the first quarter (based on August 2026 disclosure and press reports).
5
Overseas LNG assets such as Mozambique Coral, Rovuma and LNG Canada are contributing more profit, with additional final investment decisions flagged for later this year.

Business structure

Founded in 1983, KOGAS imports and sells natural gas, and as the country's sole natural gas wholesaler it effectively covers the entire domestic wholesale market while operating under the supervision of the central government and provincial governors to preserve public-service objectives.

Most revenue comes from gas sold for power generation and city-gas use, and wholesale tariffs consist of raw material costs (LNG import price plus related expenses) and the company's supply cost, with the supply cost approved after review by the Ministry of Trade, Industry and Energy and consultation with the Ministry of Economy and Finance.

Volumes therefore track domestic heating and power demand, while margins hinge on the timing and size of government tariff approvals. The second pillar is overseas resource development: the company says it is pursuing 22 overseas projects in 12 countries to secure supply stability and energy security.

Mozambique Area 4 holds reserves equal to roughly 30 years of domestic annual consumption (about 130 million tons); KOGAS bought a 10% stake in 2007 and first LNG was produced from the Coral South floating liquefaction plant in November 2022.

At LNG Canada, the plan is to produce about 700,000 tons a year through 2065 from a west-coast liquefaction plant for domestic delivery and overseas sales.

Domestically it competes with direct imports by private generators and manufacturers: of 46.33 million tons of LNG imported into Korea in 2024, 12.23 million tons, or about 26%, was directly imported, up 5% year on year.

In response the company is expanding its individual tariff scheme signed one-on-one with power plants, and it is diversifying import sources toward the United States, Canada and Australia while developing lower-carbon businesses such as hydrogen blending and LNG bunkering.

The result is an earnings profile driven by regulated margin, overseas equity profits, and oil price and currency moves.

Earnings trend

Quarterly revenue · Operating profit

₩7.6T₩404.6B25Q2₩6.4T₩389B25Q3₩9T₩473.6B25Q4₩11.8T₩910B26Q1₩7.5T₩675.3B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩51.7T₩2.5T2022₩44.6T₩1.6T2023₩38.4T₩3T2024₩35.7T₩2.1T2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩7.6T	₩404.6B	5.3%
2025Q3	₩6.4T	₩389B	6.1%
2025Q4	₩9T	₩473.6B	5.3%
2026Q1	₩11.8T	₩910B	7.7%
2026Q2	₩7.5T	₩675.3B	9.0%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩51.7T	₩2.5T	₩1.5T	4.8%	14.7%	499.6%
2023	₩44.6T	₩1.6T	-₩761.2B	3.5%	−7.9%	482.7%
2024	₩38.4T	₩3T	₩1.1T	7.8%	10.6%	432.7%
2025	₩35.7T	₩2.1T	₩133B	5.9%	1.2%	396.6%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

Revenue fell for three straight years, from 51.72 trillion won in 2022 to 44.56 trillion in 2023, 38.39 trillion in 2024 and 35.73 trillion in 2025, largely because oil and LNG prices that feed into selling tariffs eased.

Operating profit, by contrast, jumped from 1.55 trillion won in 2023 (3.5% margin) to 3.00 trillion won in 2024 (7.8%) before easing to 2.10 trillion won in 2025 (5.9%).

Volatility is far greater at the net level: net income attributable to owners swung from 1.49 trillion won in 2022 to a loss of 761.2 billion won in 2023, then 1.15 trillion won in 2024 and just 133.0 billion won in 2025.

In the fourth quarter of 2025 the company posted revenue of 8.99 trillion won and operating profit of 473.6 billion won yet a net loss attributable to owners of 406.9 billion won; Hana Securities noted that more than 600 billion won of impairment was recognized in that quarter at Mozambique, Australia's GLNG and Prelude and other assets on lower long-term oil price assumptions and discount rate changes.

The picture shifted in 2026: first-quarter revenue of 11.80 trillion won, operating profit of 910.0 billion won and net income attributable to owners of 548.6 billion won were followed by second-quarter revenue of 7.51 trillion won, operating profit of 675.3 billion won and net income of 339.1 billion won, well above the second quarter of 2025 (revenue 7.63 trillion won, operating profit 404.6 billion won, net income 85.4 billion won).

Management said revenue declined on lower selling prices as oil prices fell, while operating profit rose on lower cost of sales and higher profits at subsidiaries including those in Mozambique, and that overseas project operating profit in Myanmar, Mozambique and elsewhere rose to 330.9 billion won in the first half from 192.0 billion won a year earlier.

Summing the four most recent quarters (third quarter 2025 through second quarter 2026), net income attributable to owners was 567.9 billion won, far above the impairment-hit full-year 2025 figure.

Balance-sheet metrics also turned: operating cash flow recovered from negative 14.58 trillion won in 2022 to 5.89 trillion in 2023, 3.63 trillion in 2024 and 6.54 trillion in 2025, while total liabilities fell from 52.01 trillion won in 2022 to 42.83 trillion in 2025 and the debt-to-equity ratio from 499.6% to 396.6%.

Industry analysis

Korea's gas industry operates inside a regulated frame of wholesale monopoly plus a raw-material cost pass-through mechanism, where cost increases not immediately reflected in tariffs accumulate as unrecovered balances.

Those balances represent the gap created by supplying gas below cost under government policy, booked as an asset to be recovered through future tariffs, and while not an immediate loss, the absence of cash inflow weighs on cash flow. The cycle looks to be turning from a low oil price phase back toward a higher one.

With WTI averaging $64.8 a barrel in 2025, total unrecovered balances shrank 7.23% from 14.79 trillion won at end-2024 to 13.72 trillion won in the first quarter of 2026 without tariff hikes, but after March 2026 WTI rose to around $90 a barrel, which typically feeds into import costs with a five to six month lag.

Tariff pressure has also built: the June 2026 wholesale tariff for cogeneration power use was set at 20.8335 won per MJ, up 10.4% from 18.8694 won the prior month.

Residential adjustments, which hit household bills directly, remain a policy decision; Hana Securities said a planned residential supply-cost increase fell through in May 2026, making an increase in unrecovered balances unavoidable.

Competitively, KOGAS is a tariff-regulated utility like KEPCO and Korea District Heating, but its direct upstream stakes and overseas liquefaction projects partially offset cost pressure when oil prices rise.

At the same time, growing private direct imports and debate over a smaller LNG share in the long-term power mix remain structural constraints on domestic volumes.

Outlook

The company's disclosed pipeline centers on overseas LNG.

In June 2026 KOGAS said that after completing the final investment decision on Mozambique Coral II in October 2025, it plans to reach final investment decisions on Mozambique Rovuma and LNG Canada Phase 2 by the end of 2026, with Coral II targeting commercial production in late 2028.

Rovuma is already moving in its pre-FID stage: ExxonMobil Mozambique signed roughly $1.1 billion of pre-investment contracts on behalf of Area 4 co-venturers including KOGAS, which holds a 10% stake, and Phase 1 targets liquefaction capacity of 18.6 million tons a year.

Commercial start-up and first commissioning for that project are scheduled for 2031. Existing assets are also contributing more.

Based on second-quarter 2026 disclosure materials, combined first-half operating profit from key projects including Australia's GLNG and Prelude, Mozambique Coral FLNG and LNG Canada was 267.5 billion won, about 2.6 times the 103.1 billion won a year earlier, with LNG Canada at 143.0 billion won and Coral FLNG at 80.7 billion won (tally by 1conomy News, August 2026).

The import portfolio is being reshaped too: in August 2025 in Washington the company contracted with suppliers including Trafigura to bring in an additional 3.3 million tons a year of US LNG for ten years from 2028, sourced from projects such as Cheniere's Corpus Christi in Texas.

On capital plans, overseas project investment is expected to rise from 831.9 billion won in 2026 to 948.0 billion won in 2027 and 979.6 billion won in 2028, while investment in new businesses such as LNG bunkering and gas-to-power grows from 10.5 billion won in 2025 to 220.8 billion won in 2029.

On leadership, an extraordinary shareholder meeting on July 23, 2026 approved former lawmaker Hong Eui-rak as chief executive for a three-year term, and managing the unrecovered balances swollen by tariff restraint, alongside balance-sheet repair, is cited as the new management's top agenda.

Valuation

PER

5.5×

PBR

0.3×

ROE

5.0%

EPS

₩6,438

BPS

₩134,343

Dividend per share

₩1,154

Valuation here depends less on accounting profit than on how one reads the unrecovered balances and the debt load.

Consolidated equity of 10.80 trillion won at end-2025 (10.80 trillion attributable to owners) is well above the market value currently assigned to the company, meaning the shares trade at a meaningful discount to book value per share, in line with how Korea's regulated utilities generally trade relative to net assets.

Earnings-based multiples now capture the recovery in the four most recent quarters (567.9 billion won of net income attributable to owners from the third quarter of 2025 through the second quarter of 2026), so they screen lower than on impairment-hit full-year 2025 profit, while renewed impairments or reversals driven by oil prices and the won could swing them sharply again.

Dividends have been maintained given the state-owned character of the company, but Hana Securities said the payout ratio for fiscal 2025 actually declined despite government tax incentives and that dividend per share will ultimately be determined by earnings per share.

For reference, Hana Securities maintained a target price of 55,000 won and a buy rating in its report dated May 7, 2026 (cited as a third-party view, not KOSAI's).

The core of the multiple debate is whether the market treats the mid-13 trillion won of unrecovered balances as an asset to be collected or as policy receivables with uncertain timing.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Rising contribution from overseas upstream and liquefaction

The company said overseas operating profit from Myanmar, Mozambique and other projects rose to 330.9 billion won in the first half of 2026 from 192.0 billion won a year earlier. LNG Canada posted 143.0 billion won of operating profit in the first half of 2026 and Coral FLNG 80.7 billion won.

Because overseas profits track oil prices and volumes rather than domestic tariff decisions, they cushion earnings when regulated margin is restrained. Coral II commercial production targeted for late 2028 and pending decisions on Rovuma and LNG Canada Phase 2 are presented as the medium-term volume levers.

Turn in cash flow and leverage

Operating cash flow recovered from negative 14.58 trillion won in 2022 to 5.89 trillion in 2023, 3.63 trillion in 2024 and 6.54 trillion in 2025. Over the same span total liabilities fell from 52.01 trillion won to 42.83 trillion and the debt-to-equity ratio from 499.6% to 396.6%.

The company reported liabilities of 40.59 trillion won and a debt-to-equity ratio of 345% as of the first half of 2026, down 52 percentage points from end-2025. Working capital normalized as raw-material cost pressure eased, leaving funding-cost pressure lighter than before.

Source diversification and price competitiveness

In August 2025 the company signed contracts with suppliers including Trafigura for an additional 3.3 million tons a year of US LNG for about ten years from 2028, saying it secured competitive pricing through international tenders begun in 2024 and that the deal diversifies a Middle East-heavy import mix.

The company has outlined a reduction in Middle East LNG dependence from 45% to 24%. Industry observers argue that competitive import pricing strengthens marketing of the individual tariff scheme and the response to direct imports.

That scheme sets terms one-on-one with individual power plants and was created to counter private direct importing.

Bear factors

Mid-13 trillion won of unrecovered balances and external tariff control

The company said residential city-gas unrecovered balances reached 13.54 trillion won in the second quarter of 2026, up 167.3 billion won from the first quarter. Hana Securities assessed that with the residential supply-cost increase shelved in May 2026, a further build-up is unavoidable.

Reducing the balances requires tariff increases, government support or lower oil prices, yet the most direct route, raising tariffs, is described as difficult under a price-stability policy stance. With tariff authority outside the company, periods in which rising costs swell receivables rather than profits can recur.

Renewed oil price and currency pressure on costs

WTI rose to around $90 a barrel after March 2026, and higher crude prices typically flow into domestic LNG import prices with a five to six month lag. Each 10-won rise in the won-dollar rate is reported to cost KOGAS roughly 20 billion won a year in currency losses.

Hana Securities flagged that a weaker won could weigh on parent-only net income. When cost increases are not passed through promptly, the gap returns as unrecovered balances and financing costs.

Net income volatility from overseas asset valuation

In the fourth quarter of 2025, operating profit of 473.6 billion won coexisted with a net loss attributable to owners of 406.9 billion won, exposing the gap between operating and bottom-line results.

Hana Securities attributed this to more than 600 billion won of impairment at Mozambique, Australia's GLNG and Prelude on lower long-term oil price assumptions and discount rate changes.

The mechanism works both ways, and the same house noted room for reversal if long-term oil price forecasts rise, but either direction reduces predictability of net income and dividend capacity. With leverage still elevated at 396.6% at end-2025, valuation swings are felt more acutely.

Risk factors

Regulatory and policy risk

Wholesale supply costs are approved after review by the Ministry of Trade, Industry and Energy and consultation with the finance ministry, leaving the timing and size of increases outside company discretion.

If the government prioritizes price stability it can delay recovery and freeze tariffs; if it prioritizes fiscal soundness it can opt for phased increases, so the direction depends on policy choice. Policy costs such as expanded support for vulnerable households continue to flow directly into results. Each shift in policy can reset the earnings path, a structural feature of this stock.

Financial and funding risk

Total liabilities were 42.83 trillion won at end-2025 with a debt-to-equity ratio of 396.6%, still high. Unrecovered balances are not booked as losses but bring no cash inflow, so they weigh on cash flow.

Commentary in mid-2026 pointed to residential unrecovered balances of 13.37 trillion won at end-March and debt of about 42 trillion won as a substantial burden. In a rising rate environment, higher borrowing costs could pressure net income further.

Geopolitical and project execution risk

Middle East instability has pushed crude and LNG prices higher, widening cost pressure, and concerns have been raised that with the government focused on price stability the increase cannot be fully passed into tariffs.

Overseas projects carry execution risk too: in northern Mozambique, an armed attack in 2021 led neighboring projects to declare force majeure. For Rovuma Phase 1 the owner targets completing the final investment decision within 2026, leaving schedule slippage as a variable.

Large liquefaction projects have long payback periods and are sensitive to changes in oil price and cost assumptions.

What to watch next

During November 2026
In the third-quarter results, check whether overseas subsidiary and affiliate profit contribution holds near the first-half level (330.9 billion won of overseas operating profit) and whether residential unrecovered balances rose or fell from 13.54 trillion won in the second quarter. This is the first read on margin direction as higher crude prices feed into import costs with a lag.
Fourth quarter of 2026
Whether final investment decisions are taken on Mozambique Rovuma LNG Phase 1 and LNG Canada Phase 2. The company said it plans to decide by end-2026; approval would firm up both long-term equity offtake volumes and the capital spending schedule.
October to December 2026 winter tariff review
Watch Ministry of Trade, Industry and Energy announcements and company notices for any adjustment to residential city-gas tariffs and wholesale supply costs. An increase would set the pace of balance recovery; a freeze would determine further accumulation, either way feeding directly into financial metrics.
Around February 2027
The full-year 2026 results disclosure and the cash dividend decision. This is when any reversal of the large impairment booked in the fourth quarter of 2025, and the size of net income available for dividends, become visible together.
Second half of 2026 to first half of 2027
The new chief executive's medium-term financial management plan and roadmap for recovering unrecovered balances. Watch whether concrete measures on tariff structure, asset sales or investment rescheduling appear in public-institution disclosures and IR materials.

Overall view

KOGAS has a dual identity: a regulated utility with an effective monopoly on domestic wholesale gas, and a resource developer holding upstream stakes in Mozambique, Australia and Canada. The financials reflect that duality.

Revenue fell from 51.72 trillion won in 2022 to 35.73 trillion in 2025, yet first-half 2026 operating profit reached 1.59 trillion won, combining 910.0 billion won in the first quarter and 675.3 billion won in the second, with higher overseas profits cited as the driver.

Conversely, the 406.9 billion won net loss attributable to owners in the fourth quarter of 2025 showed how sharply overseas asset revaluation can move the bottom line.

Balance-sheet trends have improved: operating cash flow swung from negative in 2022 to 6.54 trillion won in 2025, and leverage fell from 499.6% to 396.6%. Still, residential unrecovered balances of 13.54 trillion won in the second quarter of 2026 are a reminder that tariff authority sits outside the company.

Bullish factors (growing overseas profit, import diversification, restored cash flow) and bearish ones (accumulating receivables, oil price and currency pressure, impairment volatility) carry equal weight; the next items to verify are the winter tariff review, the overseas final investment decisions targeted within 2026, and the trajectory of unrecovered balances from the third quarter onward. This report is for information purposes and contains no buy or sell recommendation.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

Show 18 more articles and sources

Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.