April 25, 2024

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[THE INVESTOR] Korea Electric Power Corp. has widely missed the fourth-quarter market estimates, said Hana Financial Investment on Feb. 7, lowering the target price to 60,000 won (US$52.76) from 71,000 won. 

Its revenue climbed up 4 percent on-year to 15.29 trillion won but operating profit plunged 52.7 percent to 1.27 trillion won, hit by the coal and oil price hike and personnel increase in its UAE power plant, said analyst Shin Min-seok.

Its earnings prospect has been lowered due to the slow fourth-quarter income and strong coal prices, but there is a possibility for fuel costs to decrease as the coal price is maintaining a stable downturn and the exchange rate is declining, said Shin maintaining a “buy” recommendation.

Kiwoom Securities echoed the analysis maintaining a “buy” recommendation and lowering the target price to 61,000 won from 75,000 won.

Despite the 3.6 percent increase in electricity sales in the fourth quarter, its operating profit was slashed to half, due to the rate cut and power plant operation ratio decline that led to rise of fuel charges and cost of purchased power, said analyst Kim Sang-gu.

Its earnings, however, will increase gradually as Weolseong plant’s two units have restarted and the third unit in Singori started commercial operation in December. Around the second-quarter earnings will be boosted by the decline in soft coal and spot LNG prices, forecast the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)