Among KEPCO Affiliates, KPS Stands Out... The Key Issue Is 'Overseas'

[Asia Economy Reporter Moon Chaeseok] The stock price of KEPCO KPS, a subsidiary of Korea Electric Power Corporation (KEPCO), has shown a steep upward trend over the past six months, attracting the attention of shareholders. Meanwhile, the stock prices of KEPCO and other subsidiaries remain sluggish.

According to the Korea Exchange on the 18th, KEPCO KPS's closing price on the 17th was 38,700 KRW, marking a 26.5% increase since its lowest point of 30,600 KRW on August 7 last year. This rise was steeper than KEPCO’s 9.3% increase during the same period.

In particular, after hitting a 52-week high of 40,800 KRW on December 19 last year and undergoing some correction, the stock surged 3.35% in a single day on the 14th, quickly turning into a 'V-shaped rebound.'

Even excluding the benefits from performance bonus refunds in the fourth quarter, securities firms analyze that the company holds several 'catalysts' to boost its stock price, such as its business structure optimized for overseas orders and decommissioning projects.

Hyundai Motor Securities expects the company’s operating profit this year to reach 208.8 billion KRW, similar to last year’s level, even without performance bonus refunds.

Achievements in the United Arab Emirates (UAE) and Pakistan brighten the company’s mid- to long-term outlook. Sales growth is expected from projects such as the UAE nuclear power plant commissioning. Starting next year, revenues from routine and planned preventive maintenance of the UAE nuclear power plant will be reflected sequentially.

In Pakistan, the market is paying attention to the establishment of a joint venture (JV) for O&M (operation and maintenance) business with Fauji Foundation, the parent company of the Daharki power plant, which KEPCO KPS has operated and maintained for over 10 years since 2009.

This JV is expected to pursue additional O&M contracts held by the partner Daharki power plant and attempt to expand business within Pakistan. If stable cash flow is secured and JV projects are well developed, the scale of the O&M business is likely to grow further.

Although maintenance revenue is expected to decline due to operational suspensions such as that of Wolsong Unit 1, the decommissioning business is likely to partially offset this. The company is anticipated to be significantly affected by nuclear plant operational suspensions starting from 2023.