[Edaily Reporter KIM YOON-JEONG ] SamsungSecurities noted that KEPCO Plant Service & Engineering(051600)posted second-quarter earnings that fell short of market expectations due to a decline in overseas business revenue and the burden of fixed costs; however, it assessed the decline in overseas revenue as a temporary factor. The firm maintained its “Buy” investment rating but lowered its target price by 16.2% to 57,000 won.

On the 11th, Kim Young-ho, an analyst at SamsungSecurities, commented on KEPCO Plant Service & Engineering’s earnings, stating, “The decline in overseas revenue led to the overall revenue decrease, and despite the revenue decline, the rise in total operating expenses—driven by fixed costs and outsourcing expenses—was the cause of the profit decline.”
KEPCO Plant Service & Engineering’s second-quarter revenue was 437.9 billion won, down 3.5% year-over-year, while operating profit was 43.6 billion won, a 33.5% decline, falling short of market consensus. Total operating expenses rose 1.5% year-over-year to 394.3 billion won.
By segment, thermal power revenue rose 8.4% year-over-year to 201.1 billion won. While the number of units that completed scheduled preventive maintenance was 37—a decrease of 17 units compared to the same period last year—this was offset by an increase in the number of units currently undergoing such maintenance.
Revenue in the nuclear power segment was 146.6 billion won, a 2.3% decrease compared to the same period last year. Although the number of nuclear power plants undergoing scheduled preventive maintenance in the second quarter was 13—an increase of 5 units from the 8 units during the same period last year—the increase was attributed to long-term contracts, resulting in a low proportion of revenue recognition.
The decline in external segment revenue was particularly pronounced. External revenue plummeted 44.7% year-over-year to 29.7 billion won. This was due to the completion of major projects with clients such as POSCO and GS Holdings.
Researcher Kim explained, “The primary cause of the decline in top-line revenue is the sharp drop in external revenue,” adding, “This is due to the completion of major projects such as those for POSCO and GS Holdings; however, since the Gwangyang Biomass O&M project is scheduled for the second half of the year, we view this as a temporary base effect.”
He further analyzed, “The sharp decline in external revenue increased the burden of fixed costs. Additionally, total operating expenses rose 1.5% year-over-year to 394.3 billion won due to an increase in planned preventive maintenance in the nuclear power sector and the expansion of short-term labor force hiring caused by schedule delays, resulting in operating profit falling short of market expectations.”
SamsungSecurities also lowered its earnings expectations. It revised its 2026 profit estimate downward by 9% and reduced the applied multiple by 10.4% from 19.3x to 17.3x to reflect the decline in the historical average price-to-earnings ratio (PER) following the recent sharp stock price correction. Consequently, the target price was also lowered by 16.2% to 57,000 won.
Analyst Kim stated, “We are revising our 2026 earnings estimate downward by 9% to reflect results that fell short of expectations, and we are lowering the target price by 16.2% to 57,000 won to account for the decline in the historical average P/E multiple resulting from the recent sharp stock price correction.”
However, the investment rating was maintained at “Buy.” Analyst Kim noted, “With a new order for the Dukovany Nuclear Power Plant in the Czech Republic imminent, the earnings base is expected to continue expanding over the medium to long term, driven by the completion of Saeul Units 3 and 4 this year and Shin Hanul Units 3 and 4, which are scheduled for completion by 2033.”

He added, “As the company has maintained a dividend payout ratio of over 50% for eight consecutive years, its appeal as a dividend stock is expected to become more prominent as we move into the second half of the year.”