[Click eStock] "KEPCO KPS, Net Profit Increasing but Stock Undervalued Due to Long-Term Sideways Movement"

Target Price Raised from 43,000 Won to 46,000 Won
2023 Net Profit Expected to Increase by 37% Compared to Last Year
Stable Around 30,000 Won Range for the Past 3 Years... 'Undervalued'

Ebest Investment & Securities raised the target price for KEPCO KPS from 43,000 KRW to 46,000 KRW on the 2nd, citing that the stock is undervalued due to long-term sideways movement. The investment rating was maintained at 'Buy.' KEPCO KPS's closing price on the 1st was 34,000 KRW.

Seong Jonghwa, a researcher at Ebest Investment & Securities, stated, "KEPCO KPS's net profit for 2023 is expected to increase sharply by more than 30% compared to 2022. Net profit has been continuously rising since 2021, based on labor cost reductions, and especially in 2023, the increase is steep. However, the stock price has continued to move sideways for a long time, making the valuation significantly cheaper compared to 2-3 years ago."

KEPCO KPS's net profit for 2023 is estimated at 138.2 billion KRW, up 37.9% from 100.2 billion KRW in 2022. In 2021, it was 98.7 billion KRW. The closing prices for KEPCO KPS were 37,700 KRW in 2021, 32,700 KRW in 2022, and 34,050 KRW in 2023. The stock has mostly traded in the 30,000 KRW range over the past three years.

KEPCO KPS's Q4 2023 earnings are expected to be 389.5 billion KRW in sales and 26.6 billion KRW in operating profit. Compared to the same period in 2022, sales are at a similar level, but operating profit has significantly decreased. Researcher Seong explained, "This is due to the particularities of cost factors, which had been anticipated early by the market and reflected in the consensus (market average forecast). The 2023 management evaluation results were better than in 2022, leading to labor cost increases, and the general wage increase for 2023 was also reflected all at once in Q4."