LS Securities announced on June 16 that it has raised its target price for Korea Electric Power from 50,000 won to 62,000 won, citing expectations for a recovery in investment momentum following the end of the Middle East conflict. The firm maintained its "buy" rating on the stock.
Analyst Seong Jong-hwa of LS Securities stated, "Before the outbreak of the Middle East conflict, all conditions were favorable. Although the stock price has adjusted nearly 40% compared to just before the war, the end of hostilities could lead to a rapid recovery in investor sentiment and corporate value."
He noted that Dubai crude prices have stabilized at around $60 to $70 per barrel, and electricity rates have increased by approximately 50% since the surge in energy prices in 2021. Additionally, the share of nuclear power generation has expanded by more than 10 percentage points, reducing the burden of fuel costs for power generation.
As a result, LS Securities projects that Korea Electric Power's operating profit for the first, second, and fourth quarters of this year will range from 2 trillion to 4 trillion won, with the third quarter expected to reach around 5 trillion won. The firm also anticipates further improvements in profitability in 2026 and 2027. For the off-peak first, second, and fourth quarters, operating profit is expected to be between 3 trillion and 5 trillion won, while the peak third quarter is projected to exceed 6 trillion won. Seong added, "If oil prices stabilize, we expect a continued stable level of wholesale electricity prices in 2026 and 2027, leading to improved profitability due to the increased share of nuclear power generation."
The nuclear power sector is also highlighted as a key investment point. Seong noted, "Internationally, there are opportunities for new nuclear power projects in countries like the Czech Republic, UAE, and Saudi Arabia, as well as potential benefits from the U.S. nuclear expansion policy in the long term." Domestically, he pointed out that the commercial operation of the Shin-Ulchin Units 3 and 4 is planned in the short term, while the commercial operation of Shin-Hanul Units 3 and 4 is expected in the medium term. In the long term, the decision to resume the construction of four large nuclear reactors and two new large reactors was also mentioned.
Seong explained that the recent reduction in the share of nuclear power generation is a temporary phenomenon due to concentrated planned maintenance. He noted, "Since the third quarter of last year, the share of nuclear power generation has been reduced for three consecutive quarters compared to the same period last year. However, starting in the second quarter, we expect a recovery in share, with a significant increase in the second half of the year due to the return of nuclear operations and the commercial operation of Shin-Ulchin Units 3 and 4."
* This article has been translated by AI.
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