Samchully Co., South Korea`s largest city gas distributor, is expected to see its shares that have been hovering in a boxed range rebound this year after it has reflected all the losses from its overseas energy resource development projects by last year. Rising gas prices are also good news.

For full 2016, the city gas distributor posted operating profit of 60.6 billion won ($53.9 million) on sales of 3.1 trillion won on a consolidated basis. Its operating profit fell 32.0 percent and sales 16.5 percent against a year ago period, largely due to a markdown in city gas price and poor performance by its subsidiaries. In March last year, the government announced an average of 9.5 percent cut in wholesale city gas prices.

By division, its city gas business registered 1.7 trillion won in sales, contributing 78 percent of the total, as of September 30. Its power generation business brought 326.6 billion won, making up 15.09 percent of the total sales, followed by power plant business with 91.8 billion won and integrated energy business with 27.2 billion won that were responsible for 4.24 percent and 1.26 percent, respectively.

Samchully, a major energy conglomerate in Korea, owns about 30 subsidiaries such as city gas engineering service provider Samchully ENG Co. and energy solution provider Samschully ES Co. Despite its strong business structure that delivers steady profits, the company had suffered unexpected losses worth 101.0 billion won from its overseas projects including energy resource development in Mexico and Iraq that embarked on in 2008.

The company has, however, completed cleaning up its income statement by reflecting all its losses from its failed overseas projects by last year, raising expectations that it would turn around this year.

The unprecedentedly lengthy cold winter also drove up local city gas demand while the country’s most populous province Gyeonggi Province and western coastal city Incheon marked up city gas supplier prices by 2.7 percent and 4.0 percent, respectively, in the second half of last year.

In addition, it launched an official BMW dealer ‘Samchully Motors’ on Saturday with an aim to collect additional returns by integrating its expertise in energy business with automobile industry.

Shares of Samchully ended Wednesday at 103,500 won, up 1,000 won or 0.98 percent from the previous session.

By Park Yun-gu

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]