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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] NH Investment & Securities has raised its target price for Korea Electric Power Corporation (KEPCO) by 15% from 26,000 KRW to 30,000 KRW, maintaining a 'Buy' rating. The firm believes that KEPCO can expand its profits without further increases in electricity prices, provided the current System Marginal Price (SMP) levels are sustained.
In a report released on December 9, NH Investment & Securities stated, “With the SMP falling by more than 14 KRW per kilowatt-hour (kWh) from October, we have revised the 12-month moving average book value per share (BPS) up by 12%.”
The report also noted that the additional electricity price hikes expected in March or April next year are unlikely due to political factors. However, NH expects that KEPCO can still improve its performance without any further hikes, as long as the SMP remains at its current levels.
The decline in SMP is attributed to factors such as lower natural gas prices, which reflect current oil prices, the increased efficiency of new liquefied natural gas (LNG) power plants, higher-than-expected temperatures, and sluggish economic conditions leading to weak demand.
NH Investment & Securities has also raised its 2025 consolidated operating profit estimate to 14.3 trillion KRW, an increase of 5 trillion KRW from the previous forecast. This increase reflects a reduction in power purchase costs, which offset higher costs for fuel, labor, and depreciation, as well as a decrease in other revenues.
Despite the profit increase, the firm pointed out that KEPCO is unlikely to issue dividends in 2024 and 2025.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
