[Click eStock] "KEPCO KPS Recovers Profitability Through Labor Cost Reduction... Target Price Set at 48,000"

Ebest Investment & Securities on the 16th newly set a target price of 48,000 KRW and a 'Buy' investment rating for KEPCO KPS. The current price based on the previous day's closing price is 36,450 KRW.

KEPCO KPS recorded consolidated sales of 351.1 billion KRW and operating profit of 54.9 billion KRW in the first quarter. This represents increases of 16% and 144%, respectively, compared to the same period last year.

In particular, the operating profit exceeded market expectations. This is analyzed as a result of improved profitability through cost reductions such as labor cost savings. KEPCO KPS has a high labor cost ratio, accounting for 40% of total operating expenses. Labor costs had been rising continuously until 2021 but declined starting last year, during which operating profit also turned to an upward trend. Operating profit margin is expected to improve significantly to 10.9% this year, as the trend of labor cost reduction is anticipated to continue.

Sung Jong-hwa, a researcher at Ebest Investment & Securities, explained, "Since the new government took office, strong cost-cutting policies such as a 10% budget reduction for public enterprises and public institutions have continued. KEPCO KPS is a labor-intensive company, so labor cost reduction is key," adding, "The public enterprise management evaluation conducted every June has also shifted under the new government to place more importance on financial and business performance than on social value contribution achievements, which has also served as a reason for labor cost reduction."

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