"Korea Electric Power Corporation, Time to Focus on Annual Dividend Appeal"

Q3 Operating Profit 2.67 Trillion KRW
Expected Dividend Per Share 1,060 KRW This Year

[Asia Economy Reporter Minji Lee] As Korea Electric Power Corporation (KEPCO) is expected to record favorable performance this year, securities firms have expressed opinions that attention should be paid to its dividend attractiveness.

According to financial information provider FnGuide on the 1st, KEPCO's sales revenue for the third quarter is expected to reach 15.6432 trillion KRW. Operating profit is expected to be 2.6688 trillion KRW. SK Securities' conservative estimate for third-quarter operating profit is 2.3989 trillion KRW, which is expected to increase by 93.6% year-on-year and 515.4% quarter-on-quarter.

Jiwoo Son, a researcher at SK Securities, said, "Although there was a loss in nuclear power plant operation rates due to the typhoon, the continued weakness in oil and coal prices basically indicates that the strong profit trend will continue," adding, "The cost burden relief due to the weak electricity market price (SMP) accompanied by ultra-weak LNG prices will act throughout the year, so profits will continue to rise."

KEPCO's operating profit for this year is estimated at 4.2 trillion KRW. It is expected to record the highest performance since the 5 trillion KRW operating profit in 2017. Researcher Jiwoo Son explained, "Although annual results for 2018 and 2019 showed consecutive losses and the annual results are not yet finalized, this year is expected to record profits in the 4 trillion KRW range," adding, "Expectations for dividend recovery, which were not paid last year, may gradually rise."

Considering that global multiple premium stocks are in a correction phase along with liquidity risks, the value of KEPCO, whose dividend attractiveness has increased, is expected to rise further. If KEPCO complies with the dividend payout ratio guideline of 40% set by government-invested institutions, the annual dividend per share (DPS) is expected to be 1,060 KRW. Based on the recent closing price, it is expected to record a dividend yield of 5.4%.

Hyejeong Jung, a researcher at KB Securities, said, "Although uncertainties remain regarding major policies affecting KEPCO's operating environment, such as the electricity rate reform plan, short-term dividend attractiveness is emerging as operating profit on a separate basis improves," adding, "It is time to place expectations on dividends."