[Edaily Reporter Park Jung-Soo ] On the 15th, Meritz Securities maintained its “Buy” investment rating for KoreaElectricPower(015760)but lowered its target price by 12.3% from 65,000 won to 57,000 won, citing the possibility of increased regulatory risks in the short term. The previous day’s closing price was 33,950 won.
Moon Kyung-won, an analyst at Meritz Securities, stated, “While second-quarter operating profit is expected to exceed market expectations, cost pressures resulting from rising oil prices will begin to be fully reflected starting in the second half of the year,” adding, “It is highly likely that significant upward momentum for the stock price will not materialize until after the end of the year.”
Meritz Securities projected that KoreaElectricPower’s second-quarter consolidated operating profit would reach 2.3518 trillion won, a 10.1% increase year-over-year. This figure exceeds the market consensus (1.9122 trillion won) by 23.0%. However, the firm noted that while nuclear power plant utilization rates were lower than expected, this was offset by improved coal-fired power plant utilization rates.
However, the firm lowered its full-year earnings forecast. Meritz Securities revised its operating profit forecast for this year downward by 11.7%, from 8.4097 trillion won to 7.4259 trillion won. This is because the burden of fuel costs resulting from rising oil prices is expected to impact second-half earnings. The operating profit forecast for 2027 was also adjusted downward by 9.8% from the previous estimate to 14.4942 trillion won.
In the short term, the firm anticipates that policy risks will increase. Analyst Moon explained, “As the government pushes forward with its ‘Three Major Mega Projects,’ there is a possibility that special rate plans for AI data centers will be introduced and industrial electricity rates will be reduced,” adding, “Expanded investment in transmission and distribution networks could also become a burden in terms of profitability and cash flow.”
On the other hand, the firm assessed that the investment environment is likely to improve after the end of the year. Analyst Moon noted, “If inflation stabilizes due to falling oil prices, discussions on raising residential electricity rates could resume, and talks regarding the consolidation and nationalization of power generation subsidiaries could also serve as factors for a medium- to long-term re-rating.”
He continued, “By the end of the year, momentum related to nuclear power—including the Vietnam nuclear power plant, new domestic nuclear power plants (under the 12th Basic Plan for Power Supply and Demand), and investments in the U.S.—is expected to strengthen,” adding, “This could also be a time when expectations for improved earnings and increased dividends in 2027 come to the fore.”