[Click eStock] "Stable Earnings and Dividend Appeal: KEPCO KPS, Target Price Maintained"

Daishin Securities maintained its buy rating and target price of 60,000 KRW for KEPCO KPS on the 19th, stating that "stable earnings realization and dividend generation are expected due to increased nuclear power plant maintenance sales." The previous day's closing price was 46,750 KRW.

On the same day, Heo Min-ho, a researcher at Daishin Securities, said, "KEPCO KPS's expected dividend per share this year is 2,400 KRW (payout ratio 60%), with a dividend yield of 5.1%, making it attractive for dividends."

Researcher Heo evaluated, "Nuclear power is Korea's next-generation growth business, and KEPCO KPS has the cheapest valuation among nuclear-related stocks with price-to-earnings ratios (PER) of 11.7 times this year and 11.2 times next year."

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He added, "Even if the administration changes in the future, the possibility of reverting to a 'nuclear phase-out' policy is low," and "Most countries, except Germany, are expanding nuclear power. Nuclear power is emerging as a key clean baseload power source to reduce the increased costs of power system integration (backup and balancing costs, grid costs, etc.) associated with the share of renewable energy generation."

For the fourth quarter of this year, sales are expected to be 459.8 billion KRW and operating profit 56.8 billion KRW, representing a 4.4% increase and a 3.8% decrease respectively compared to the same period last year. Researcher Heo said, "Operating profit is expected to meet the market consensus forecast of 56.9 billion KRW," and ▲an increase in the number of nuclear power plants undergoing planned preventive maintenance ▲an expansion in the number of pumped-storage plants undergoing planned preventive maintenance are expected to drive sales growth," adding, "The provision related to labor costs due to obtaining an A grade in management evaluation (previously B grade for the past three years) is expected to be 14 billion KRW. Although this one-time cost increase is expected to slightly reduce operating profit, the actual operating profit is improving."

Furthermore, he predicted, "Investments in operation management and maintenance to enhance safety and continued operation of aging nuclear power plants will continue," and "Following Shin-Hanul Unit 2 in the second quarter of this year, one nuclear power plant each will be operated in 2025 and 2026, sustaining growth in nuclear power maintenance sales." He added, "The increase in nuclear power maintenance sales will offset the sluggish sales in thermal power maintenance," and "Considering the reflection of increased construction engineer labor costs in maintenance unit prices, future sales and operating profit are expected to maintain stable growth of 3-5% annually."

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