PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩875 per share · Prices as of the 2026-10-02 close
Kyungdong City Gas is the monopoly city gas supplier for Ulsan and Yangsan, showing steady improvement in operating margin and financial structure even as revenue has contracted.
2025 annual operating profit rose year-on-year to KRW 33.0 billion, with an operating margin of 1.9%, the highest in the past four years.
The debt ratio declined for four consecutive years, from 170.3% in 2022 to 95.5% in 2025, marking an improved financial structure.
In Q1 2026, industrial demand such as refineries increased on lower and more stable city gas prices, so revenue fell but operating profit and net income rose.
The company continues diversifying through new businesses such as its pipeline-leasing operation, launched in 2018 as the first among city gas companies, and hydrogen refueling station operations.
Gyeongsangnam-do applied a relatively large increase to the retail supply cost for the Yangsan area in its 2025-2026 supply cost adjustment.
Kyungdong City Gas was established in 2017 through a spin-off of the city gas business division from Kyungdong Invest, and it operates as a general city gas supplier covering all of Ulsan Metropolitan City and Yangsan City in Gyeongsangnam-do.
Its core business structure is to purchase natural gas wholesale from Korea Gas Corporation and retail it through its own pipeline network to residential, industrial, commercial, and power-generation customers.
The company stated in its business report that, as of 2024, it held an 8.3% national market share by cumulative supply volume among 34 city gas companies.
The city gas industry is a regulated business in which local governments designate a single operator per region, giving the company a de facto monopoly within its service area. The company presents its vision as an "energy solutions platform company imagining the future of energy,
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩336.7B | ₩2.9B | 0.9% |
| 2025Q3 | ₩288.8B | ₩3.6B | 1.2% |
| 2025Q4 | ₩446.4B | ₩8.7B | 1.9% |
| 2026Q1 | ₩541.8B | ₩19.6B | 3.6% |
| 2026Q2 | ₩447.5B | ₩7.1B | 1.6% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩2.3T | ₩25.3B | ₩24.2B | 1.1% | 6.1% | 170.3% |
| 2023 | ₩1.8T | ₩28.3B | ₩30.6B | 1.6% | 7.3% | 126.1% |
| 2024 | ₩1.8T | ₩27B | ₩28.6B | 1.5% | 6.4% | 112.5% |
| 2025 | ₩1.8T | ₩33B | ₩32.8B | 1.9% | 6.9% | 95.5% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23
On an annual basis, revenue declined for three consecutive years from KRW 2.3049 trillion in 2022 to KRW 1.7995 trillion in 2023, KRW 1.7919 trillion in 2024, and KRW 1.7595 trillion in 2025, a pattern attributed to the normalization of natural gas prices that had spiked during the 2022 energy crisis.
In contrast, operating profit rose from KRW 25.3 billion in 2022 to KRW 33.0 billion in 2025, with the operating margin improving from 1.1% to 1.9%, moving in the opposite direction of revenue.
Net income attributable to owners also showed an overall improving trend despite fluctuations, moving from KRW 24.2 billion in 2022 to KRW 30.6 billion in 2023, KRW 28.6 billion in 2024, and KRW 32.8 billion in 2025.
The debt ratio fell for four straight years, from 170.3% in 2022 to 126.1% in 2023, 112.5% in 2024, and 95.5% in 2025, showing a clear improvement in financial stability.
However, operating cash flow recorded a net outflow of KRW 11.0 billion in 2023 before recovering to KRW 74.9 billion in 2024 and KRW 56.4 billion in 2025, indicating notable year-to-year volatility.
Quarterly results show pronounced seasonality, with Q1 2026, the peak heating-demand quarter, posting revenue of KRW 541.8 billion and operating profit of KRW 19.6 billion, the highest of the period, while the off-season Q3 2025 saw only KRW 288.8 billion in revenue and KRW 3.6 billion in operating profit.
In Q1 2026, revenue fell 21.2% year-on-year while operating profit rose 9.4% and net income rose 10.1%, which market data attributes to lower, more stable city gas prices restoring price competitiveness against alternative fuels and boosting industrial usage such as at refineries.
Q2 2026 recorded revenue of KRW 447.5 billion, operating profit of KRW 7.1 billion, and net income attributable to owners of KRW 7.2 billion, normalizing from the seasonal peak of the preceding quarter.
Domestic city gas rates consist of raw material costs, wholesale supply costs, and retail supply costs, each determined through a different process involving international LNG prices and exchange rates, approval by the Ministry of Trade, Industry and Energy, and approval by local government price policy committees, respectively.
During the 2022-2023 energy price surge, the government kept rates below cost, causing accumulated receivables at Korea Gas Corporation, and market commentary notes that how quickly this balance is recovered remains a key variable for future wholesale supply cost adjustments.
In Kyungdong City Gas's service area, Gyeongsangnam-do adjusted city gas supply costs applicable from July 2025 through June 2026, with the Yangsan area's average supply cost rising from KRW 2.0406 to KRW 2.2173 per MJ, a relatively larger increase compared to other operators in the province.
The city gas industry is expected to see modest long-term demand growth given its advantages as a clean and convenient fuel, but it remains sensitive to regional industrial conditions since fuel switching can occur among industrial users depending on oil and alternative fuel price movements.
Kyungdong City Gas benefits from a large refining and petrochemical industrial base in Ulsan, giving it a relatively high share of industrial sales, and industrial demand tends to respond quickly when city gas price competitiveness improves, as seen in Q1 2026.
The nationwide city gas industry operates under a regionally monopolistic supply structure alongside operators such as Samchully, Seoul City Gas, and Incheon City Gas, making it a regulated industry with limited direct competition.
According to the company, the stabilization of lower city gas prices has improved price competitiveness against alternative fuels, drawing in industrial demand such as refineries, and if this trend continues there is room for sales volume itself to grow even amid weak petrochemical sector utilization.
The pipeline-leasing business launched in 2018 is a stable, fee-based operation providing pipeline leasing and safety management services for self-consumption direct-import volumes, and the company continues to develop it as a pillar of business diversification.
Hydrogen refueling station operations and investment in hydrogen fuel cell power generation are new businesses extending the company's stated vision as an "energy solutions platform company,
The company's stock tends to trade at a discount relative to its book net asset value, a characteristic commonly observed in the utility sector. The market's earnings multiple relative to profit scale appears to sit closer to the lower end of the trading band formed over past years.
The fact that annual net income attributable to owners has shown an overall recovering trend since 2022, despite fluctuations, is a relevant factor when assessing this earnings multiple.
City gas is a regulated industry that often features stable cash flow and dividend capacity, so shareholder return policy through dividends tends to be considered alongside valuation discussions.
That said, the continued contraction in revenue scale and large seasonal swings in results are factors that should be weighed together when interpreting the earnings multiple.
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 2026-08-23
Even as revenue declined for three straight years, the operating margin improved from 1.1% in 2022 to 1.9% in 2025, and the debt ratio fell for four consecutive years from 170.3% to 95.5% over the same period. This suggests the company has combined cost management with securing profitable volume.
Strengthened financial stability could also support the sustainability of shareholder return policies such as dividends.
Q1 2026 results show that as city gas prices stabilized lower, price competitiveness against alternative fuels recovered, boosting industrial usage such as at refineries. The structure of falling revenue alongside rising operating profit and net income indicates that the combination of volume and cost worked favorably.
Ulsan's large-scale refining and petrochemical industrial base remains a demand pool that can benefit from this dynamic.
The pipeline-leasing business, launched in 2018 as the first among city gas companies, has established itself as a source of stable fee income tied to self-consumption direct-import volumes.
Hydrogen refueling station operations and investment in hydrogen fuel cell power generation are viewed as attempts to broaden revenue sources beyond traditional city gas supply. These new businesses have the potential to serve as a complement to the core business, which has significant revenue volatility.
Revenue declined for three consecutive years from KRW 2.3049 trillion in 2022 to KRW 1.7595 trillion in 2025. While this stems from the structural normalization of natural gas prices, the shrinking absolute revenue base can also be interpreted as a signal that the foundation for future profit growth is narrowing.
If regional industrial weakness, such as small business closures or lower petrochemical utilization rates, persists, revenue recovery could be further delayed.
Quarterly results show a large gap between revenue and operating profit during the winter heating-demand season and the summer off-season. A representative example is Q3 2025, when operating profit was only KRW 3.6 billion, compared to KRW 19.6 billion in Q1 2026.
Operating cash flow also recorded a net outflow of KRW 11.0 billion in 2023, showing that cash-generating capacity can temporarily weaken in certain years.
City gas rates—raw material costs, wholesale supply costs, and retail supply costs—are all determined subject to approval by the government or local authorities, limiting the company's independent control over pricing policy.
The timing and magnitude of wholesale supply cost adjustments can vary depending on the pace of Korea Gas Corporation's receivables recovery and the direction of price stabilization policy.
Retail supply cost adjustments by local governments can also differ by region between increases and freezes, limiting predictability.
The company's cost structure is directly linked to international LNG spot prices and the won-dollar exchange rate, so sharp moves in either variable can immediately affect margins.
Raw material costs are adjusted quarterly, but wholesale and retail supply cost adjustments lag, which can create temporary margin pressure. Geopolitical risk and changes in supply policy among major LNG-producing countries also remain potential variables.
Because the refining and petrochemical industrial sector accounts for a large share of sales in the Ulsan region, the utilization rates and cycle of that sector significantly affect results.
An economic downturn leading to small industrial closures or lower utilization at large petrochemical operators can directly reduce sales volume. This stems from the structural characteristic of being a city gas company whose business base is concentrated in a single region.
Because city gas rates and business licensing are determined under public regulations set by the government and local authorities, changes in policy direction directly affect operating conditions.
If the government's price stabilization priority strengthens, there is a possibility that cost increases may not be fully reflected in rates. Changes in city gas demand structure resulting from energy transition policy are also a factor to monitor over the medium to long term.
The Q3 2026 quarterly report filing should be checked to confirm off-season earnings trends and whether industrial demand momentum continues.
The winter heating-demand season is the key period determining the direction of annual results, so sales volume and rate conditions should be monitored.
The dividend declaration for fiscal year 2026 and the annual business report should be checked to confirm the progress of new businesses and shareholder return policy.
The timing and direction of the Ministry of Trade, Industry and Energy's wholesale supply cost adjustments and local government retail supply cost re-adjustments, particularly for the Yangsan area, should be monitored.
International LNG spot prices and the won-dollar exchange rate directly affect the cost structure and should be monitored continuously.
Kyungdong City Gas operates as a monopoly supplier in the regulated city gas industry across the Ulsan and Yangsan regions; while revenue has contracted for three consecutive years since 2022, the operating margin and debt ratio have both improved markedly over the same period.
Q1 2026 demonstrated a structure in which operating profit and net income rose despite falling revenue, driven by recovered city gas price competitiveness, and the seasonal pattern of winter results substantially exceeding summer results continues to repeat.
New businesses such as pipeline leasing and hydrogen refueling stations are viewed as attempts to secure revenue sources beyond traditional city gas supply, though their share of overall results remains understood to be limited.
On the cost side, international LNG price and exchange rate movements, along with government and local government rate approval processes, remain key variables, and dependency on regional industrial conditions is also a structural characteristic.
The situation appears to combine positive trends of improving financial structure and profit recovery with negative factors of revenue contraction and regulatory and seasonal risks. Before making any investment decision, it would be useful to check the upcoming Q3 results and the trajectory of the winter demand season.
Report written 2026-09-05 · Data as of 2026-09-04
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