[Click eStock] "Korea Electric Power, Positive Earnings Improvement Due to Electricity Rate Increase"
Electricity Rate Increase and Decline in Power Purchase Price
Rapid Recovery of Financial Soundness Despite Policy Risks
Oil Price Drop and Nuclear Plant Operation Also Positive Factors
On the 13th, KB Securities maintained its 'Buy' rating and target price of 29,000 KRW for Korea Electric Power Corporation (KEPCO). Despite recent policy risks, they presented a positive investment opinion, expecting continued performance improvement in 2025 based on the increased electricity rates.
![[Click eStock] "Korea Electric Power, Positive Earnings Improvement Due to Electricity Rate Increase"](http://www.asiae.co.kr/news/img_view.htm?img=2024072311590861242_1721703549.png)
According to KB Securities, KEPCO's sales for Q4 2024 are expected to be 23.8 trillion KRW (+5.7% YoY, -8.8% QoQ), operating profit 2.9 trillion KRW (+51.0% YoY, -15.0% QoQ), and net profit attributable to controlling shareholders 1.2 trillion KRW (-5.9% YoY, -37.3% QoQ). The projected operating profit exceeds KB Securities’ previous forecast and market consensus by 26.3% and 14.3%, respectively. The significant improvement in operating profit is attributed to the expansion of power sales margins due to electricity rate hikes and a decline in power purchase costs. From Q4 2024, the effect of the industrial electricity rate increase implemented on October 24 is partially reflected, with the power sales price expected to rise by 4.0% compared to the same period last year.
KEPCO’s performance improvement is expected to accelerate further in 2025. Sales are projected to reach 97.4 trillion KRW (+4.0% YoY), and operating profit 12.9 trillion KRW (+46.7% YoY).
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Jeong Hye-jeong, a researcher at KB Securities, stated, "Considering the ongoing policy risks, additional electricity rate hikes in 2025 are unlikely; however, the maintenance of the preemptively increased electricity rates alone is expected to rapidly restore KEPCO’s performance and financial soundness." She added, "The sharp rise in the KRW-USD exchange rate could pose a risk factor, but the forecasted decline in oil prices and the potential operation of the new Saeul Unit 3 nuclear power plant are positive factors."
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