Korea Electric Power Corp.’s earnings will begin to improve from the second quarter as the operation ratio of nuclear power plants rises, said HI Investment and Securities on Feb. 25, raising the target price to 40,000 won (US$35.70) from 35,000 won.
It has set the operation ratio guidance at a conservative 77 percent for this year, but considering that its preventative maintenance period for its 23 in-use plants has normalized from last year, the ratio will be higher than estimated. In the first quarter, the ratio will remain at the level of the fourth quarter last year, but in the second quarter will hike to 90.2 percent. Recent stabilization of oil and coal prices and a fuel cost decline following the revision in taxation for power generation fuel will be reflected from the second quarter, prompting the company’s meaningful turnaround, said analyst Won Min-seok.
The extent of a stock price rise, however, could be limited due to uncertainties regarding regulations such as the environmentally aware power supplying system, the analyst added.
By Hwang You-mee (firstname.lastname@example.org)