[Edaily Reporter KIM YOON-JEONG ] KB Securities reported that a short-term slowdown in earnings for KoreaElectricPower(015760)is inevitable as the impact of rising international energy prices due to the war in the Middle East begins to be reflected in power procurement costs, and lowered its target price to 54,000 won, a 14.3% reduction from the previous level. However, it maintained its “Buy” investment rating, taking into account the stabilization of international oil prices and expectations for entry into the U.S. nuclear power market.

On the 23rd, Jeong Hye-jeong, an analyst at KB Securities, stated, “We are revising our target price downward by 14.3% to 54,000 won to reflect factors such as higher-than-expected liquefied natural gas (LNG) unit prices, power purchase costs, and exchange rates compared to our previous forecast.”
She added, “Considering the downward stabilization of international oil price forecasts following the war and the potential for entry into the U.S. nuclear power market, we believe there is still room for growth and therefore maintain our ‘Buy’ investment rating.”
KB Securities projected that KoreaElectricPower Corporation’s second-quarter revenue would reach 22.7 trillion won, a 3.4% increase year-over-year, while operating profit would decline by 15.3% to 1.8 trillion won. It estimated that net income attributable to controlling shareholders would rise by 12.6% to 1.3 trillion won.
Analyst Jeong explained, “The projected operating profit is 8.8% below the consensus,” adding, “As the rise in international energy prices is reflected with a lag, fuel unit costs for LNG and coal-fired power generation rose by 9.3% and 7.4%, respectively, compared to the previous quarter, while the System Marginal Price (SMP) also increased by 12.0% over the same period.” He added, “With power procurement costs rising by 0.7 trillion won as a result, while electricity rates remain frozen, a decline in profits is inevitable.”
Researcher Jeong cited several factors that enabled KoreaElectricPower (KEPCO) to achieve its highest-ever valuation—at a price-to-book ratio (PBR) of 1.0—earlier this year: △ electricity rates that remained elevated; △ international energy prices that remained low; and △ expectations of entering the U.S. nuclear power market.
He noted, “As the second premise was undermined by the sharp rise in international energy prices due to the war, the valuation quickly fell to 0.5 times,” but assessed that “the remaining drivers remain valid.”
He further analyzed that if the U.S.-Iran conflict subsides and international oil prices (WTI) begin to stabilize at the pre-war level of $60 per barrel, the valuation—which has fallen in the meantime—is likely to recover.
The firm also viewed the potential for entry into the U.S. nuclear power market positively. Analyst Jeong stated, “It is positive that, with the Special Act on Investment in the U.S. taking effect on the 18th, the nuclear power and energy infrastructure sectors are being strongly considered as the first projects.”
KB Securities explained that the target price of 54,000 won corresponds to a forward 12-month price-to-book ratio (PBR) of 0.71, representing an upside potential of 42.1% relative to the current stock price.