[Click eStock] "KEPCO KPS Confirms Earnings Bottom... Growth Momentum to Continue This Year"

[Asia Economy Reporter Ji-hwan Park] On the 26th, Eugene Investment & Securities stated that a bottom was confirmed in last year's performance of KEPCO KPS, and it is expected to show a rapid improvement in performance this year. Accordingly, they presented a 'Buy' investment opinion and a target price of 36,000 KRW.

Researcher Seonghyun Hwang of Eugene Investment & Securities said, "In the fourth quarter of last year, sales and operating profit were 400.1 billion KRW and 26.2 billion KRW, respectively, recording a sluggish performance that fell short of market consensus based on operating profit."

Despite an increase in new overseas orders, the main reasons for the poor performance are analyzed as an increase in low-profit external business proportion, a decrease in nuclear power sales, an increase in management evaluation performance, and labor costs. Last year, it is noted that the performance decline was largely due to one-time factors such as a 35 billion KRW provision for management evaluation performance in Q2 and a 48.3 billion KRW cost for establishing the Nuclear Decommissioning Research Institute reflected in Q3.

In the fourth quarter of last year, sales by business division were 134.7 billion KRW for thermal power, 137 billion KRW for nuclear and hydro power, 47.4 billion KRW for external business, and 60.2 billion KRW for overseas business. The nuclear business division saw a decrease in planned preventive maintenance performance due to an increase in nuclear power plant operation rates, and overseas business sales increased as the UAE commissioning contract was reflected.

This year, performance improvement is expected to be rapid due to the disappearance of one-time costs. Sales are projected at 1.3 trillion KRW and operating profit at 164.4 billion KRW, representing increases of 2.1% and 21.5% respectively compared to the previous year. Researcher Seonghyun Hwang emphasized, "Considering last year's performance as the bottom and the dividend attractiveness, it is necessary to pay attention to the current stock price."