Shinhan Investment & Securities said on the 26th that structural reform must come first for the nuclear power momentum to gain traction at Korea Electric Power Corporation. It raised its target price to 62,000 won from 50,000 won. The previous session's closing price for Korea Electric Power Corporation was 61,200 won, leaving 1.3% upside.
Choi Gyu-hyeon, senior researcher at Shinhan Investment & Securities, said, "Improvement in the power generation mix from higher nuclear utilization and the addition of new reactors will contribute to earnings growth," noting that Korea Hydro & Nuclear Power Co. (KHNP)'s nuclear utilization target this year reaches a record high of 89% for the first time in 15 years, and that commercial operation of Saeul Unit 3 is expected to begin in the second half.
He added that further earnings growth is likely as the average annual energy price and the system marginal price (SMP) decline. Based on these assumptions, he said, "This year's operating profit on a consolidation basis is expected to reach 19.7 trillion won, up 29.7% from a year earlier."
He also noted changes in the policy environment surrounding the nuclear power business. Choi said, "A pan-government task force (TF) has been launched to revise the South Korea-U.S. nuclear agreement, and efforts are underway to unify nuclear export channels," adding, "There is a possibility that plans to enter the U.S. nuclear market centered on 'Team Korea' will be fleshed out." He added, "The progress of key nuclear order pipelines in Vietnam, Türkiye and Saudi Arabia is also a major point to watch."
However, he also emphasized that structural reform must precede any medium- to long-term share price gains driven by nuclear expectations. He said, "Structural reform is needed through improving the financial structure based on rate hikes and expanding DPS through a higher payout ratio."