[Click e-Stock] "KEPCO Poised for Revaluation of Overseas Nuclear Power EPC Business Value"

Target Price Raised to 80,000 Won

Daishin Securities raised its target price for Korea Electric Power Corporation (KEPCO) to 80,000 won on the 25th while maintaining its "Buy" investment rating.

Through a report released that day, Minho Heo, a researcher at Daishin Securities, stated regarding KEPCO, "Through nuclear power cooperation with the United States, KEPCO is expected not only to participate in the construction of large nuclear power plants and small modular reactors (SMRs) in the U.S., but also to enter overseas markets jointly," adding, "Accordingly, a revaluation of the business value of overseas nuclear power EPC projects is anticipated."

He went on to explain, "It will not be easy to expect a meaningful impact from an electricity rate hike this year, but we anticipate continued improvement in earnings and capital expansion driven by the continuation of a favorable mid- to long-term tariff policy, the completion of the East Coast transmission network, and improvements in the power generation mix."

He also highlighted dividends. Researcher Heo said, "This year, separate-basis net income is projected at 7.7 trillion won, and assuming a dividend payout ratio of 30%, the dividend per share (DPS) would be around 3,600 won," adding, "Based on the current share price, the dividend yield is expected to be about 5.7%."

If KEPCO takes charge of the AP1000 nuclear power plant's "reactor and turbine building construction plus auxiliary equipment EPC," the order amount for two units is estimated at 18.8 trillion won. If it is responsible for "reactor building construction plus turbine building and auxiliary equipment EPC," the amount is projected at 23.1 trillion won. The order amount for the Korean-type nuclear power plant is expected to be 26 trillion won.

Daishin Securities forecast KEPCO's revenue at 98.18 trillion won and operating profit at 18.889 trillion won. Researcher Heo said, "Despite a rise in the average annual exchange rate, fuel costs and power purchase costs are expected to decline, thanks to lower LNG import prices this year following the drop in oil prices in the second half of last year and the recovery of the nuclear power plant utilization rate to 88.6%."