Market: KOSPI (015760)
Brokerage : Eugene Investment & Securities
Analyst : Seong-hyun Hwang, Ph.D.
Investment Rating : BUY (Maintained)
Target Price : KRW 92,000 (Maintained)
Core Momentum : Downside risks are mitigated by favorable settlement coefficients and potential SMP caps, while nuclear power mix normalization and US-Korea nuclear partnership provide strong fundamental leverage.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained), Target Price KRW 92,000 (Maintained).
- Financial Estimates:
- 2025A: Revenue KRW 97.43 Trillion, Operating Profit KRW 13.49 Trillion, Pre-tax Profit KRW 11.59 Trillion, Net Profit KRW 8.67 Trillion, EPS KRW 13,311, ROE 19.4%, P/E 3.5x, P/B 0.6x, EV/EBITDA 5.8x.
- 2026E: Revenue KRW 97.26 Trillion, Operating Profit KRW 14.67 Trillion (Revised slightly from KRW 14.97 Trillion), Pre-tax Profit KRW 11.84 Trillion, Net Profit KRW 8.84 Trillion, EPS KRW 13,586, ROE 17.0%, P/E 3.0x, P/B 0.5x, EV/EBITDA 5.0x, Dividend Yield 4.4%.
- 2027E: Revenue KRW 98.15 Trillion, Operating Profit KRW 20.65 Trillion (Revised from KRW 22.66 Trillion), Pre-tax Profit KRW 17.82 Trillion, Net Profit KRW 13.34 Trillion, EPS KRW 20,343, ROE 21.6%, P/E 2.0x, P/B 0.4x, EV/EBITDA 4.0x.
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Review:
- Consolidated Revenue reached KRW 24.0 Trillion (+3% QoQ, +1% YoY) and Operating Profit recorded KRW 3.7 Trillion (+94% QoQ, +1% YoY), maintaining solid profitability.
- Despite a sharp 11%p YoY decline in nuclear generation share caused by concentrated 1H maintenance, operating profit was well-defended through lower power purchase costs.
- Electricity sales volume totaled 140TWh (-1% YoY); industrial sales dropped 2% YoY on economic slowdown, while residential (+1% YoY) and commercial (+2% YoY) edged up.
- Lower nuclear availability resulted in higher thermal output from coal (+27% YoY) and LNG (+17% YoY), raising fuel costs to KRW 5.2 Trillion (+4% YoY), while higher renewable mandates expanded RPS costs to KRW 1.2 Trillion.
- Generation Mix Normalization & Outlook:
- Full-year nuclear utilization rate is guided to rebound to 85% supported by new plant commercial operations and maintenance completions in 2H (analyst model assumes 82%).
- The restart of Kori Unit 2 in 2H is expected to drive substantial operating leverage through reduced fuel expenses and mix normalization.
- Long-term baseload expansion will be reinforced in 2027 with the grid connection of Shin-Hanul Units 3 & 4 and life-extended nuclear units.
- Regulatory Environment & Global Nuclear Drivers:
- Institutional buffers including favorable settlement coefficients and the potential invocation of the SMP cap mechanism post-July limit downside margin risk.
- Restructuring of the power market, including finalized designs for regionally differentiated tariffs in 2H and post-election electricity rate reforms.
- Positioned to capture a valuation premium as the main contractor in US nuclear buildouts alongside Team Korea amid supply chain bottlenecks in the US.
- Resolving IP and enrichment issues in bilateral negotiations is expected to significantly enhance global export competitiveness.
📝 Editor’s Comment (Perspective)
The analyst views KEPCO as a resilient utility that has validated its structural profit defense through favorable settlement coefficients and market mechanisms, and is now poised for substantial operational leverage driven by 2H nuclear normalization and bilateral US-Korea nuclear energy cooperation. The overarching perspective prioritizes the qualitative restoration of baseload margins and the long-term enterprise value upside from participating in US and overseas nuclear fleet reconstructions over short-term commodity price volatilities.
To verify whether this investment thesis unfolds as anticipated, key monitoring milestones include the timely restart of Kori Unit 2 leading to an 80%+ nuclear utilization recovery, the final policy framework for regional electricity tariffs and post-election rate restructuring, and concrete bilateral agreements regarding equity investments and main contractor roles in US nuclear projects. These developments can be tracked through KEPCO’s quarterly financial disclosures, KPX power market data, and official MOTIE policy updates.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
