KEP Korea Electric Power Corporation

Summary:
Korea Electric Power Corporation is the dominant player in Korea's electricity sector. It continues to be well-positioned to capitalize on growth opportunities in this market and to benefit from the industry restructuring initiatives of the Korean government. Its growth story will be bolstered by higher electricity tariff rates, higher electricity volume sales, an improving overseas business and a recent regulatory approval for the fuel cost pass-through mechanism. However, we are taking a conservative and cautious view on the stock given the scenario of foreign currency valuation loss, escalating fuel costs, the increased price of purchased power and uncertainty surrounding pending regulatory cases. As such, we are maintaining our Neutral recommendation on Korea Electric Power.

Overview:

Korea Electric Power Corporation (KEP), also known as KEPCO, is an integrated electric utility engaged in the generation, transmission, distribution of electricity and development of electric power resources in South Korea. The company was incorporated on Jan 1, 1982. As of Dec 31, 2012, it had a total of 563 generation units, including nuclear, thermal, hydroelectric, and internal combustion units with a total installed generating capacity of 68,848 megawatts (MW). Its wholly-owned six generation subsidiaries are: Korea Hydro and Nuclear Power (KHNP), Korea South-East Power (KOSEP), Korea Midland Power (KOMIPO), Korea Western Power (KOWEPO), Korea Southern Power (KOSPO), and Korea East-West Power (KEWESPO).

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