Zoom photo A power meter installed in a residential area in Seodaemun-gu, Seoul [출처 : 연합뉴스]
Korea Electric Power Corporation, which had recorded the biggest operating loss since Dangun just two years ago, has transformed into a company that generates trillions in profit earned in just one quarter. As the first quarter earnings announcement approaches, expectations for earnings rise, but stock prices tend to fall. Initially, it was expected that electricity rates would increase after the April 10 general elections, but concerns that the increase in electricity rates would be delayed due to rising prices are holding stock prices back.
As of 11 am on the 29th, KEPCO is trading at 21,200 won, up 150 won (0.71%) from the previous day.
Korea Electric Power Corporation stock price fell 16.70% in just over a month and a half from its short-term high of 25,450 achieved on the 15th. This number is significantly lower than the KOSPI’s rate of return of 0.42% during this period.
KEPCO’s stock price was very good from the end of last year to the beginning of this year. The stock price, which was 16,030 won at the end of October last year, rose 58.76% in five months to around 25,000 won at the end of March this year.
Stock prices, which had been doing well, began to decline significantly beginning in mid-March.
The performance outlook is very positive. Korea Electric Power Corporation recorded a record operating loss of 32.665 trillion won in 2022. This is because the government, concerned about price increases, has halted the increase in electricity rates as raw material prices rise to the soaring because of the war in Ukraine. Last year, the annual deficit reached 4.542 trillion won.
However, in the first quarter of this year, KEPCO is expected to generate an operating profit of about 3 trillion won. Based on Fn Guide, KEPCO’s average operating profit forecast for the first quarter is 2.675 trillion won. The forecast, which was 1.5 trillion won at the end of last year, is being rapidly revised upwards as the earnings announcement approaches. In the past two weeks, all four securities firms that released forecasts for KEPCO’s first quarter operating profit predicted operating profit in the 3 trillion won range.
KEPCO’s operating profit forecast for the first quarter is the highest among all listed companies. Based on listed companies that have announced their performance so far, it ranks 5th after Samsung Electronics (KRW 6.6 trillion), Hyundai Motors (KRW 3.5574 trillion), Kia (KRW 3.4257 trillion), and SK Hynix (KRW 2.886 trillion). It is more than KB Financial Group (KRW 2.3554 trillion) and Shinhan Financial Group (KRW 2.0682 trillion).
The biggest reason for the downward trend in Korea Electric Power Corporation’s stock price is concerns about the delay in the electricity rate increase. Electricity rates are set in March, June, September and December each year. The government, which started raising electricity rates in 2022, raised electricity rates by around 40% by the second quarter of last year. Since then, household electricity rates have been frozen for a year from the third quarter of last year to the second quarter of this year.
Enlarge photo Korea Electric Power Corporation stock price trend in the last six months. [출처 : 구글 파이낸스]
The securities market was predicting that electricity rates would rise again from the third quarter after the general election in April, but the recent price situation is taking an unusual turn. Oil prices are rising again due to political instability in the Middle East, and as the value of the Korean won per dollar falls, the burden of import prices increases. There are signs that the government’s stance, which emphasized the need for realistic electricity rates, is also changing.
Choi Sang-mok, Deputy Prime Minister and Minister of Strategy and Finance, said on the 18th (local time), “Because the price situation is still difficult, we are thinking conservatively about public utility bills for now. He also said, “(For now) we have no choice but to maintain the current trend, but we will have to wait and see.”
Securities markets are also weighing the possibility of a third-quarter electricity rate freeze. As the third quarter is the time of year when electricity bills are at their highest due to demand for cooling, complaints about rising electricity rates may increase. In addition, although there is much work to be done to eliminate the accumulated deficit, it is true that KEPCO generates a surplus of trillions of earnings per quarter, so the justification for raising electricity rates is much weaker than o’ the front.
Seong Jong-hwa, a researcher at E-Best Investment & Securities, said, “The key issue is an appropriate level of rate hike to resolve the huge accumulated deficit between 2021 and 2023, but the second quarter is a period of government policy . from the freezing of public utility rates during the first half of the year and administrative procedures such as the formation of the National Assembly immediately after the general election, the possibility seems low,” said term, so the possibility of an increase in the rate appears to be low. “The fourth quarter is probably the time for the rate increase,” he said.
#quarter #operating #profit #whopping #trillion #won.. #KEPCOs #stock #price #falling
