KB Securities said on the 7th that Korea Electric Power Corporation is expected to benefit from strengthened Korea-U.S. nuclear power cooperation. With the possibility of an electricity rate hike also increasing, both value and earnings are expected to be re-evaluated. Accordingly, the investment opinion was raised to "buy" from "hold," and the target price was also increased by 19.1% to 56,000 won.
KEPCO and its subsidiaries are expected to expand their foothold in the nuclear power market going forward. A large-scale U.S. nuclear power plant construction project by Korea Hydro & Nuclear Power Co. (KHNP), in which KEPCO holds 100% equity, and Fermi America is underway, and the establishment of a joint venture (JV) between KHNP and Westinghouse is currently under review. It is also known that a revision to the nuclear cooperation agreement will be reflected in the fact sheet related to the Korea-U.S. tariff negotiations to be announced soon.
Korea can currently enrich uranium to less than 20% only with U.S. consent. Reprocessing of spent nuclear fuel is also prohibited, but the government is pursuing discussions to secure authority at the same level as Japan for uranium enrichment to less than 20% and reprocessing.
Jeong Hye-jeong, a KB Securities analyst, said, "Going forward, KHNP and KEPCO are expected to be able to expand into the nuclear fuel business."
Expectations are also rising for improved earnings through an electricity rate hike. With the introduction of a regionally differentiated rate system, the view is that there will be a practical effect of higher electricity rates.
Jeong said, "Large-scale domestic power grid investments are needed, such as the operation of the Yongin semiconductor cluster in 2028 and the opening of the West Coast energy expressway in 2030," adding, "Earnings improvement and a structural re-evaluation of nuclear power value are expected."