Market: KOSPI (015760)
Brokerage : Shinhan Securities
Analyst : Kyu-heon Choi, CFA
Investment Rating : Trading BUY (Maintained)
Target Price : KRW 62,000 (Upgraded)
Core Momentum : Supported by plunging SMPs and stabilizing fuel prices driving 2026 operating profit growth, target price is upgraded on KHNP’s 15-year high nuclear utilization target and inter-agency TF momentum surrounding global nuclear exports.
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: Trading BUY (Maintained), Target Price raised by 24.0% to KRW 62,000 (based on PBR valuation with multiple expansion and upward earnings revisions, upside potential 1.3%).
- Target Price Valuation Rationale: Applied multiple shifted from a 10% discount to a 10% premium based on overseas nuclear opportunities. Earnings revisions are grounded in oil prices around $60/bbl, SMP staying below 100 KRW/kWh, and nuclear utilization reaching 89.1% (+4.5%p YoY).
- Financial Estimates:
- 2024A: Revenue KRW 93.40 Trillion, Operating Profit KRW 8.36 Trillion, Controlling Net Profit KRW 3.49 Trillion, EPS KRW 5,439, ROE 9.2%, P/E 3.7x, P/B 0.3x, EV/EBITDA 6.5x, Dividend Yield 1.1%.
- 2025F: Revenue KRW 96.69 Trillion, Operating Profit KRW 15.17 Trillion, Controlling Net Profit KRW 9.31 Trillion, EPS KRW 14,504, ROE 21.1%, P/E 3.3x, P/B 0.6x, EV/EBITDA 4.9x, Dividend Yield 3.4%.
- 2026F: Revenue KRW 97.46 Trillion, Operating Profit KRW 19.68 Trillion (+29.7% YoY, OPM 20.2%), Controlling Net Profit KRW 12.82 Trillion (+37.6% YoY), EPS KRW 19,965, ROE 23.8%, P/E 3.1x, P/B 0.7x, EV/EBITDA 4.3x, Dividend Yield 3.4%.
- 2027F: Revenue KRW 97.97 Trillion, Operating Profit KRW 19.50 Trillion (-0.9% YoY), Controlling Net Profit KRW 12.75 Trillion, EPS KRW 19,863, ROE 19.5%, P/E 3.1x, P/B 0.6x, EV/EBITDA 4.2x, Dividend Yield 3.4%.
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Preview:
- Consolidated Operating Profit projected at KRW 3.5 Trillion (+46.5% YoY, OPM +15.4%), beating market consensus.
- Quarterly SMP fell sharply to 95.2 KRW/kWh (-21.7% QoQ), while ongoing declines in oil and coal prices significantly ease cost burdens.
- Absent one-off charges, full-year 2025 operating profit is estimated at KRW 15.2 Trillion (+81.4% YoY).
- 2026 Growth Drivers & Generation Mix:
- Operating profit is expected to reach KRW 19.7 Trillion (+29.7% YoY) supported by assumptions of further annual energy price and SMP declines.
- KHNP set its 2026 nuclear utilization target at 89.0% (+4.5%p YoY), the highest level in 15 years.
- Commercial operation of Saeul Unit 3 scheduled for 2H is expected to structurally improve generation mix and boost earnings.
- Nuclear Export & Policy Momentum:
- Launch of an inter-agency government task force to revise the US-Korea Nuclear Agreement alongside ongoing unification of nuclear export channels.
- Concrete entry strategies for Team Korea into the US nuclear market expected, alongside pipeline progress across Vietnam, Türkiye, and Saudi Arabia.
- Sustainable long-term appreciation requires fundamental balance sheet repair via tariff adjustments and dividend expansion via higher payout ratios.
📝 Editor’s Comment (Perspective)
The analyst views KEPCO as a utility entering a substantial earnings upcycle with 2026 operating profit reaching the KRW 19 Trillion mark driven by commodity and SMP declines, alongside multiple re-rating potential supported by a 15-year peak in nuclear utilization targets (89%) and government-level nuclear export initiatives. While acknowledging the strong operational tailwinds from nuclear mix improvements and overseas catalysts, the core perspective maintains that sustained fundamental re-rating requires balance sheet restoration through tariff hikes and enhanced shareholder returns, warranting a tactical Trading BUY approach.
To verify whether this investment thesis unfolds as anticipated, key tracking points include whether KHNP achieves its 89% nuclear utilization target alongside the commercial launch of Saeul Unit 3 in 2H, the sustained moderation of oil prices ($60/bbl WTI) and SMPs (below 100 KRW/kWh), tangible progress from the inter-agency task force regarding US nuclear cooperation, whether the unification of nuclear export channels is finalized, and milestone developments across pipeline bids in Vietnam, Türkiye, and Saudi Arabia. These dynamics can be monitored through KEPCO’s quarterly financial disclosures, KPX power market data, and official MOTIE energy policy releases.
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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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