[Click eStock] Korea Electric Power's "6 Trillion Won Quarterly Deficit" Where Are the Leaks...

by Hwang Junho

Published 19 Apr.2022 08:23(KST)

On the 23rd, amid the ongoing sweltering heat, a monitor displaying the current power supply status is installed in the lobby of the annex building of the Korea Electric Power Corporation Seoul Headquarters in Jung-gu, Seoul. / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Junho Hwang] Meritz Securities has maintained the target price for Korea Electric Power Corporation (KEPCO) at 60,000 KRW. It is difficult to discuss mid- to long-term improvements amid quarterly losses of 6 trillion KRW.

KEPCO's operating loss for the first quarter of this year is expected to reach 6.7 trillion KRW, falling short of the market expectation of 5.3 trillion KRW. While the selling price increased by only 2.5%, the System Marginal Price (SMP) rose by 136.4% year-on-year, and coal import prices surged by 146.1% compared to the previous year. As a result, cost indicators sharply increased, and the deficit is projected to expand to an all-time high.

On the bright side, the nuclear power utilization rate increased by 6.2 percentage points year-on-year to around 88%, helping to reduce the deficit. In the second quarter of this year, although the selling price is expected to increase by 6.9 KRW per kWh, Meritz Securities anticipates that the deficit will likely remain around 6.2 trillion KRW due to rising costs driven by the surge in coal prices following the Russia-Ukraine conflict.

Researcher Mungyungwon of Meritz Securities stated, "It is difficult to discuss mid- to long-term improvements while recording quarterly losses of around 6 trillion KRW. KEPCO's bond issuance has already reached approximately 12 trillion KRW this year, and the shrinking capital base along with increased interest expenses may limit profit growth even if the business environment improves in the future." He particularly forecasted, "The debt scale will increase alongside rising borrowing costs due to interest rate hikes."