[Click eStock] "Korea Electric Power, Favorable 'Value-Up' Policy... Target Price Up"

[Image source=Yonhap News]

On the 22nd, NH Investment & Securities maintained its 'Buy' rating on Korea Electric Power Corporation (KEPCO) and raised the target price to 30,000 KRW, stating that considering favorable policies such as the corporate value-up program, there are fewer variables related to electricity rate hikes.

Minjae Lee, a researcher at NH Investment & Securities, said, "We raised the target price due to the possibility of further consensus upgrades and favorable government policies."

KEPCO has been unable to execute nearly 3 to 4 trillion KRW annually due to capital expenditures (CAPEX) amounting to only 70-80% of the planned amount following large-scale deficits. According to the basic power supply and demand plan to be announced in March, large-scale investments are needed for new nuclear power plants, fuel switching to gas, and supporting transmission and distribution infrastructure. Considering interest payments exceeding 5 trillion KRW, at least 23 trillion KRW or more in EBITDA (earnings before interest, taxes, depreciation, and amortization) is required.

Lee analyzed, "The expected EBITDA for 2024 is 21 trillion KRW, making further financial structure improvements difficult at this level. Considering the need for shareholder return policies following the value-up program, the policy of electricity rate normalization is expected to continue."

Meanwhile, Europe has stabilized natural gas supply by switching Russian PNG (pipeline natural gas) to LNG (liquefied natural gas) while simultaneously increasing nuclear, wind, and solar power generation. Lee diagnosed, "Considering that there are few additional variables until the upcoming winter, SMP (system marginal price) is also expected to stabilize downward due to the decline in LNG prices."