[Click eStock] "Korea Electric Power's Q1 Operating Profit Expected to Meet Market Expectations"

On the 18th, LS Securities maintained a buy rating and a target price of 30,000 KRW for Korea Electric Power Corporation (KEPCO), stating that "despite the impact of mutual tariffs in the United States, relatively stable earnings are expected."

On the same day, Seong Jong-hwa, a researcher at LS Securities, said, "Although large-cap stocks with a high export ratio have declined following the announcement of mutual tariffs by the U.S., KEPCO, as a domestic stock, is neutral to tariff impacts and is playing the role of a defensive and alternative stock."

KEPCO's consolidated operating results for the first quarter are expected to show sales of 24.8255 trillion KRW, a 7% increase compared to the same period last year, and operating profit of 3.9423 trillion KRW, a 203% increase, in line with the market consensus forecast.

The significant improvement in first-quarter operating profit is attributed to an average 9.7% increase in industrial electricity rates implemented since October last year (an average 5.2% increase effect across all usage categories), stabilization of raw material prices, and improvement in power generation mix (expansion of nuclear power generation).

Researcher Seong stated, "KEPCO turned profitable at around 1.9 trillion KRW in the third quarter of 2023 after nine consecutive quarters of losses from the second quarter of 2021 to the second quarter of 2023 due to a sharp rise in raw material prices. Since then, operating profit has continuously increased based on a stable revenue growth trend supported by intermittent but steady rate hikes, energy price stabilization, and improvement in power generation mix, indicating excellent earnings direction."

Since eliminating cumulative operating losses is necessary to expand dividends, the possibility of additional rate hikes is a key investment point. Researcher Seong noted, "Considering that there is no plan to raise public utility rates in the first quarter, the early presidential election phase, and the peak electricity demand season in the third quarter, it is highly likely that electricity rates will be raised only once in the fourth quarter this year. Until the fourth quarter, there is a lack of momentum for stock price increases."