Market: KOSPI (015760)
Brokerage : Mirae Asset Securities
Analyst : Jay JH Ryu (Joo-hee Kim)
Investment Rating : Neutral (Maintained)
Target Price : KRW 51,000 (Maintained)
Core Momentum : While nuclear export opportunities to the US provide upside catalysts, cost uncertainties stemming from Middle East tensions and headwinds against further tariff increases warrant a prudent wait-and-see stance.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Neutral (Maintained), Target Price KRW 51,000 (Maintained at 0.6x P/B, upside potential 5.8%).
- Valuation Multiples: 2025F P/E 3.5x (Market P/E 17.5x), P/B 0.6x (adjusted from the previous 0.8x peak to 0.5x levels).
- Financial Estimates:
- 2024A: Revenue KRW 93.40 Trillion, Operating Profit KRW 8.37 Trillion, Net Profit KRW 3.49 Trillion, EPS KRW 5,439, ROE 9.2%, P/E 3.7x, P/B 0.3x, Dividend Yield 1.1%.
- 2025F: Revenue KRW 97.44 Trillion, Operating Profit KRW 13.53 Trillion (missing consensus of KRW 14.98 Trillion), Net Profit KRW 8.62 Trillion, EPS KRW 13,423, ROE 19.6%, P/E 3.5x, P/B 0.6x, Dividend Yield 3.3%.
- 2026F: Revenue KRW 97.48 Trillion, Operating Profit KRW 14.42 Trillion, Net Profit KRW 8.30 Trillion, EPS KRW 12,924, ROE 16.0%, P/E 3.7x, P/B 0.6x, Dividend Yield 3.2%.
- 2027F: Revenue KRW 97.56 Trillion, Operating Profit KRW 13.75 Trillion, Net Profit KRW 8.00 Trillion, EPS KRW 12,466, ROE 13.6%, P/E 3.9x, P/B 0.5x, Dividend Yield 3.2%.
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Review:
- Revenue reached KRW 23.69 Trillion (+0.7% YoY) with average selling price up 1.7% YoY, but sales volume declined 1.4% YoY due to economic slowdown and fewer working days (industrial power sales fell 3.7% YoY).
- Operating Profit recorded KRW 1.98 Trillion (OPM 8.4%), falling short of market expectations.
- Cost increases were driven by carbon emission rights, nuclear decommissioning provisions, lower nuclear plant availability, and subsidiary overseas business expenses alongside a 3.8% YoY drop in other revenues.
- 2026 Outlook & Fundamental Drivers:
- Higher economic growth and increased operating days are expected to mitigate the power sales volume contraction observed in 2025 (-0.1% YoY).
- Power mix is set to improve through reduced coal generation and increased nuclear output.
- With industrial electricity tariffs at ~170 KRW/kWh in 4Q25 placing sustained cost pressures on the industrial sector, additional tariff increases appear difficult to implement in the near term.
- Tariff Restructuring & Nuclear Opportunities:
- Discussions are underway with the government to restructure time-of-use tariffs and implement regional differential pricing in response to expanding solar generation.
- While actual profitability may be constrained depending on terms negotiated with Westinghouse, potential nuclear reactor exports to the US represent a significant new market opening.
📝 Editor’s Comment (Perspective)
The analyst characterizes KEPCO as a regulated utility navigating a complex crosscurrent: while new nuclear generation expansion and potential US export opportunities offer structural catalysts, near-term profitability remains clouded by 4Q25 earnings misses, Middle East-driven fuel cost pressures, and limited scope for additional tariff hikes given elevated industrial rates. The core perspective emphasizes that long-term earnings trajectory hinges primarily on the direction of power market tariff reforms and international oil prices, justifying a cautious wait-and-see stance until clarity on cost variables improves.
To determine whether this investment thesis unfolds as anticipated, key tracking points include the recovery trajectory of power sales volume alongside higher nuclear generation shares, the finalized regulatory framework for seasonal, time-of-use, and regional electricity tariffs, and the tangible commercial terms established in potential US nuclear export agreements involving Westinghouse. These metrics can be verified through KEPCO’s quarterly financial disclosures, KPX power market data, and official energy policy publications released by the Ministry of Trade, Industry and Energy (MOTIE).
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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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