KEPCO shares near annual bottom with little sign of relief on income balance

2022.06.20 10:54:58 | 2022.06.20 15:41:29

[Photo by MK DB]이미지 확대

[Photo by MK DB]

Shares of Korea Electric Power Corp. (KEPCO) slide towards annual bottom as local brokerage houses side with offshore investors abandoning the state utility firm with little sign of relief to its snowballing deficit that is expected to top $2 billion by the end of the year.

Shares of KEPCO fell 4.41 percent to close at 21,700 won ($16.79) on Monday after the government decided to put off deliberation of the state utility’s request for a hike in the third-quarter rates planned for Monday “for further review.”

They are nearing the annual bottom of 20,050 won on Jan. 28 and off more than 65 percent from 2016 historic high of 63,700 won as foreign investors have been dumping once multibillion-dollar profit-making public enterprise heavily during the period.

Foreigners held 94.59 million shares as of Friday, or 14.73 percent, sharply down from 172.46 million or 26.86 percent in June 2019.

They lost confidence in the stock under energy policy of last liberal government that phased out of nuclear reactors and rapidly pushed towards pricy renewable sourcing.

KEPCO has been recording losses from the second quarter of last year.

이미지 확대
According to KB Securities, KEPCO will likely record an operating loss of 6.95 trillion won ($5.37) in the second quarter ending June. Losses since a year ago would pile up to 21.2 billion won, This year’s losses alone could reach 25 trillion won, more than four times last year’s full-year 5.9 trillion won.

Despite spike in fuel import and production costs, it has been constrained from raising electricity bills due to the impact on inflation nearing 6 percent.

Experts believe rates must be raised minimum 40 percent to cover its losses.

Local brokerages mostly advise against buying the stock.

Out of 13 companies, only four, including Korea Investment & Securities and NH Investment & Securities, maintained a long position, while others stood neutral. They suggested 23,000 won as KEPCO’s target price.

By Cha Chang-hee and Jenny Lee

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