Shinhan Investment Corp. announced on July 15 that it has raised its target price for Korea Electric Power Corporation (KEPCO) from 43,000 won to 45,000 won, citing a stabilization in key energy prices. The firm also upgraded its investment recommendation to 'buy.'
Han Seung-hoon, a researcher at Shinhan Investment, stated, "The stabilization of major energy prices has occurred faster than expected, prompting us to revise our earnings forecasts upward. With oil prices having peaked and the momentum for nuclear power generation expected to gain traction in the second half of the year, we see positive developments ahead."
He noted that the momentum from nuclear power-related policies in the second half of the year is also expected to be a key investment point. Han explained, "The advancement of overseas nuclear projects in countries like Vietnam and the United States, along with the operation of the Shin-Ulchin Unit 3 in the fourth quarter, will alleviate the burden of power generation costs. There is also a possibility that the upcoming 12th Basic Plan for Power Supply and Demand, expected to be announced by the end of the year, will include new large-scale nuclear power plants and small modular reactors (SMRs)."
Shinhan Investment forecasts KEPCO's consolidated operating profit for the second quarter to be 1.9 trillion won, an 8.8% decrease compared to the same period last year, which aligns with market expectations.
The full impact of rising costs is anticipated to be felt starting in the third quarter. Han remarked, "In the second quarter, both liquefied natural gas (LNG) prices and the system marginal price (SMP) fell compared to the previous year, meaning the effects of rising energy prices have not yet been fully reflected. However, the decline in nuclear power utilization has been offset by an increase in the utilization of coal-fired power generation."
He added, "Considering the government's focus on alleviating the burden of living costs, the likelihood of an increase in electricity rates is limited, although the specifics of a differentiated electricity pricing system by region are expected to be clarified in the second half of the year."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.