[Edaily Reporter kyoungeun kim ] Shinhan Investment Securities announced on the 13th that it is maintaining its “Buy” rating and target price of 45,000 won for KoreaElectricPower(015760), which reported second-quarter earnings that fell short of market expectations due to prolonged preventive maintenance at nuclear power plants. The firm forecasts that cost pressures will ease in the second half of the year as the prolonged preventive maintenance is resolved and new nuclear power plants come online, and advises investors to pay close attention to policy announcements expected in September and October.
Han Seung-hoon, an analyst at Shinhan Investment Securities, stated in a report released that day, “Consolidated operating profit came in at 1.1 trillion won (-47.2% year-over-year), falling short of the consensus estimate (2 trillion won),” adding "Operating expenses totaled 20.8 trillion won (+4.9%) due to an overall increase in costs, including fuel expenses (4.9252 trillion won, +14.1%) and repair and maintenance costs (832.9 billion won, +13.8%)."
The company continued, “The longer-than-expected preventive maintenance at the Wolseong Units 2, 3, and 4 nuclear power plants was the reason for the increase in repair and maintenance costs,” “As a result, the utilization rate of nuclear power plants fell to 74.8% (-8.5 percentage points), and their share of total power generation decreased to 49.1% (-5.3 percentage points), while the utilization rate of bituminous coal rose to 45.5% (+7.3 percentage points),” the company explained. Purchased power costs totaled 8.4866 trillion won (-1.3%), decreasing year-over-year due to weak wholesale electricity prices (SMP), despite the decline in the share of baseload power generation.
A researcher added, “After recording a monthly average of 138 won per kilowatt-hour (kWh) in July, the daily weighted average SMP for onshore power in early August touched the 150-won range, marking the start of a full-fledged upward trend,” and noted, “As energy price increases resulting from the U.S.-Iran conflict begin to be fully reflected starting in the third quarter, a slowdown in earnings is expected to be inevitable.”
However, the analyst cited the won-dollar exchange rate’s decline to the low 1,400 won range as a positive factor. Regardless of the outlook for a slowdown in earnings, the analyst judged that the likelihood of an electricity rate hike is low, given the government’s policy stance aimed at alleviating the burden of living expenses and the fact that oil prices have peaked.
Annual earnings estimates were revised downward. Operating profit estimates were lowered by -9.1% for 2026 and -20.1% for 2027; accordingly, BPS (book value per share) decreased to 80,660 won (-1.4%). However, the target PBR (price-to-book ratio) of 0.55x was maintained, and the target price was set at 45,000 won, unchanged from the previous estimate. The current stock price trades at a 12-month forward PBR of 0.42x and a PER (price-to-earnings ratio) of 5.4x.