[Click eStock] "KEPCO Poised to Become a Full-Fledged Growth Stock"

On December 19, Stunning Value Research stated that Korea Electric Power Corporation (KEPCO) is transitioning from a utility stock to a growth stock, driven by the advent of the artificial intelligence (AI) industry and the growth of the small modular reactor (SMR) industry. The firm assessed that it is now time for a re-evaluation of KEPCO's valuation (the stock price level relative to corporate value).

KEPCO's cumulative sales and breakdown for the third quarter of this year are as follows: electricity sales at 72.5 trillion won (65.4%), nuclear power generation at 11.9 trillion won (10.7%), thermal power generation at 22.3 trillion won (20.1%), and others at 4 trillion won (3.8%). Market expectations for its 2026 performance are also forming, with projected sales of 99.5 trillion won (up 1.85% year-on-year) and operating profit of 10.8 trillion won (operating profit margin of 17.7%), forecasting the largest results since its founding.

Jeon Youngdae, a researcher at Stunning Value Research, explained, "As the United States expands the construction of new large-scale nuclear power plants domestically, it is expected to reinforce its insufficient supply chain with Korean companies. If the Korea-U.S. nuclear cooperation agreement is revised, entry into the new field of nuclear fuel processing is also anticipated." He added that the expected trends of electricity rate increases and declines in oil and raw material prices are also likely to fuel the advent of the 100 trillion won sales era.

KEPCO is also expected to shed its image as a perpetually loss-making utility stock. Although it continued to post losses from 2021 to 2023, it has been accelerating its turnaround into profitability since 2024. Over the past five years, the compound annual growth rate (CAGR) of sales has reached 12.7%.

Researcher Jeon stated, "With the arrival of the AI era, electricity is now recognized as a core necessity, and amid global power shortages, cost-effective small modular reactors are being introduced over hydro or thermal power. A full-fledged transition to a growth stock calls for a re-evaluation of its valuation."