NH Investment & Securities said on the 9th that SK Gas is expected to benefit if the blockade of the Strait of Hormuz is prolonged. It maintained its "Buy" investment opinion and raised the target price to 330,000 won from 280,000 won. The previous trading day's closing price of SK Gas was 231,500 won.
Lee Min-jae, an analyst at NH Investment & Securities, said, "Centered on Ulsan, where Ulsan GPS and others are located, benefits are expected across the entire value chain, from power generation to demand such as data centers," and noted, "If the blockade of the Strait of Hormuz is prolonged, liquefied natural gas (LNG) prices could rise, which would be an opportunity for Ulsan GPS to secure higher competitiveness compared with other combined-cycle power plants."
When the war between Russia and Ukraine broke out in the past, the gap between the prices of LNG and liquefied petroleum gas (LPG) widened, creating arbitrage opportunities.
The analyst estimated, "Assuming Ulsan GPS had been operating at that time, 1.2 trillion won in profit would have been generated over two years from the second half of 2021."
As of March this year, LNG is $15 per MMBTU (a unit of heat), and LPG is $780 per MT, which is a level similar to the second half of 2021.
The analyst added, "While LNG is difficult to substitute in the short term, LPG can be, so arbitrage opportunities driven by the widening price gap between the two commodities are expected to gradually increase if the blockade of the Strait of Hormuz is prolonged."