The increase in the “electricity bill” in the stock market is regrettable”…Korea Electric Power Corporation’s stock price plunged 11% (comprehensive)
The stock market responded that the government’s decision to raise electricity bills on the 2nd could not completely resolve KEPCO’s deficit problem.
It also predicted that the rate hike will have a negative impact on stock prices in the short term as it falls below market expectations.
Earlier, the Ministry of Trade, Industry and Energy and KEPCO announced on the 30th of last month that they would raise electricity rates by 13.1 won per kilowatt-hour (kWh) in the first quarter of this year.
The appropriate annual electricity rate increase submitted by the Ministry of Industry and the KEPCO to the National Assembly is 51.6 won per kWh, and the rate increase in the first quarter of this year is about a quarter of a year.
Na Min-sik, a researcher at SK Securities, said, “The increase is ¼ the level of the increase in electricity rates previously claimed by the Ministry of Industry, so it falls below expectations in the stock market.”
“The increase in electricity bills is expected to increase sales by KRW 7.3 trillion annually, but it is not a meaningful number at a time when the annual operating loss is expected to be KRW 30 trillion this year,” he said.
Jung Hye-jung, a researcher at KB Securities, also predicted, “The increase in electricity rates this year is positive for KEPCO’s performance improvement, but it will be difficult to raise it enough to resolve the deficit.”
“Like last year, there is a possibility that electricity rates will increase sequentially every quarter,” he said. “The key is how much more we can raise rates at a time when high inflation is still maintained.”
Shinhan Investment & Securities estimated that even after the second quarter, the average annual increase in electricity bills will be 40.8 won, lower than the 50 won per kWh, even if the government raises the rate by 11.4 won every quarter.
Park Kwang-rae, a researcher at the institute, said, “Assuming that the rate rises by more than 10 won per kWh every quarter, starting with a hike in electricity bills in the first quarter, KEPCO’s annual operating deficit will decrease from 33 trillion won to 9.3 trillion won this year.”
He maintained his “neutral” investment opinion, saying, “The stock price will not have much room to rise as the stock price has recently risen as expectations for a rate hike are already reflected in the stock price.”
Lee Min-jae, a researcher at NH Investment & Securities, also judged that the short-term stock price impact is negative because the electricity rate hike does not meet market expectations.
In fact, in the securities market, KEPCO closed at 19,350 won, down 11.24% from the previous trading day, falling below the 20,000 won level again in about a month.
Foreigners and institutions sold a net KRW 8.7 billion and KRW 36.6 billion, respectively, while individuals bought a net KRW 44.6 billion alone.