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(Photo= Yonhap news) |
[Alpha Biz= Reporter Kim Jisun] Hyundai Motor Securities Lowers Target Price for Korea Electric Power Corporation Due to Increased Nuclear Power Costs and Fuel Expenses
Hyundai Motor Securities has revised its target price for Korea Electric Power Corporation (KEPCO) downward from 32,000 KRW to 29,000 KRW, considering increased nuclear power generation costs and fuel expenses. However, the firm maintains a "Buy" rating, citing the potential for buying opportunities at the lower price point.
In a report released on the 21st, Hyundai Motor Securities stated, "With the domestic economic momentum weakening, it is challenging to raise expectations for rate hikes."
For 2024, the firm forecasts KEPCO's revenue to increase by 2.4% year-on-year to 90.3 trillion KRW, with an operating profit turning positive to reach 8.3 trillion KRW.
Hyundai Motor Securities added, "Expectations are for a weakening of the Korean won and stabilization of fuel costs in the second half of the year, leading to sustained high levels of performance." They predict KEPCO will report strong Q3 results, with revenue of 24.7 trillion KRW and operating profit of 3.6 trillion KRW, exceeding consensus estimates.
The report also noted that the average electricity selling price in June hit a record high of 166.2 KRW per kilowatt-hour (kWh). The third quarter's performance is expected to benefit from the effects of last year's electricity rate hikes.
Regarding the wholesale electricity price (SMP), the report mentioned, "Although it has risen compared to Q2, overall fuel costs, including for coal and NLG, are falling rapidly." The stabilization of the won is expected to reduce the burden of fuel and electricity procurement costs in the second half of the year.
Hyundai Motor Securities emphasized, "With favorable exchange rates and energy prices, strong performance is expected without relying on additional rate hikes. A gradual upward trend in stock prices is anticipated."
As of the previous closing price of 19,970 KRW, there is a 45.2% potential upside to the target price. The annual estimated price-to-earnings ratio (PER) is 3.8x, price-to-book ratio (PBR) is 0.3x, and return on equity (ROE) is 8.9%.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
