​”KEPCO, increased long-term operating profit due to reorganization of electricity rates… Target is’upward'” [KB증권]

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The government recently announced a plan to reorganize electricity bills, including information that separately displays and reflects environmental-related expenses such as fuel cost fluctuations due to changes in international energy prices, renewable energy supply certificate (REC) and carbon credit purchase costs. It was decided to apply from May.

Jung Hye-jung KB Securities estimates that KEPCO’s long-term after-tax operating profit will increase 6.6% due to the government’s restructuring of electricity rates.

Researcher Jeong said, “In addition to the fuel non-linkage system, the reorganization will include the transfer of electricity bills to climate and environment costs, which will improve the stability of operating profit.”

However, it is estimated that next year’s operating profit will decrease by 46.9% from this year to 2.1 trillion won.

Researcher Jeong said, “In reflection of the lower fuel cost, the unit of electricity sales for next year is expected to be reduced by 3.0% compared to the previous year, while the cost of carbon credits is expected to increase by 1.6 trillion won from this year to 2.5 trillion won, exceeding the portion reflected in electricity bills. Because” he explained.

Researcher Chung pointed out whether changes in overall costs other than fuel costs could be included in electricity rates in the future as a risk factor that will determine KEPCO’s share price further rise. In addition, it is predicted that the transfer of fuel costs and climate and environment costs will affect the direction of the leading stock price.

Researcher Jeong said, “If the increase in environmental costs and the fluctuations caused by the rise in international energy prices are not reflected in time, the uncertainty in operating profit will increase.”

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