Korea Electric Power Corp (KEP)

Price$12.21Cached quoteAs of 2026-09-10 08:21 UTC

AI: Fair-priced

Price checkThe shares look cheap on earnings and book value, but huge debt absorbs much of that discount.

Using the observed U.S. depositary share price, the SEC’s one-half-share ratio and a same-day exchange rate, the stock is about 2.6 times 2025 earnings, 0.45 times 2025 book value, meaning shareholder equity, and 4.3 times 2025 free cash flow, meaning cash left after running and investing. But 2024 was roughly 6.3 times earnings and 13 times free cash flow, showing how much the bargain case depends on 2025 repeating. Financial liabilities minus cash were about ₩127.7 trillion, nearly six times the stock-market value. That balance makes the price fair rather than clearly cheap.

Big pictureProfit has recovered sharply, yet cash generation remains fragile after years of severe losses.

Revenue rose from ₩58.6 trillion in 2019 to ₩92.6 trillion in 2024, while net income swung from a ₩24.5 trillion loss in 2022 to a ₩3.5 trillion profit in 2024. Approved 2025 statements then showed ₩8.5 trillion of profit attributable to shareholders. Free cash flow was negative in every year from 2019 through 2023, turned positive by about ₩1.7 trillion in 2024, and improved to roughly ₩5.0 trillion in 2025. First-half 2026 operating profit then fell about 17%, showing the recovery remains uneven.

Business strengthStable electricity demand supports the business, but government pricing control and heavy leverage limit its quality.

KEPCO’s national electricity role gives it durable demand, but the balance sheet remains weak. At 2025 year-end, current liabilities were ₩67.1 trillion against ₩30.7 trillion of current assets, while financial liabilities were about ₩129.9 trillion and cash was only ₩2.2 trillion. Shares outstanding were still 641.96 million at the March 2026 annual meeting, so dilution was not the repair tool. Capital spending stayed heavy, reaching ₩15.8 trillion in 2025. Cash from financing turned negative in 2024 and 2025 after large positive inflows during the 2022-2023 loss years.

What could change the storyLower fuel costs and debt reduction could unlock value, while tariff cuts could erase the recovery.

The bull case requires earnings to stay strong enough to fund roughly ₩15 trillion of yearly investment and still reduce debt. June’s decision to keep the fuel adjustment at +₩5 per kilowatt-hour helps. The bear case is concrete: the proposed regional industrial tariff could lower customer payments by about ₩2.8 trillion a year before offsets from cheaper regional wholesale power or government support. If free cash flow stays near 2025 levels and obligations fall steadily, the shares could be undervalued; another return to negative cash generation would make today’s discount insufficient.

AI: News

Regional industrial tariff planA proposed regional pricing system could lower industrial bills sharply, creating major new pressure on earnings.

On August 26, the government and KEPCO unveiled a plan to cut industrial electricity rates by up to 10% outside parts of the Seoul area. Officials estimate about ₩2.8 trillion less annual tariff revenue. The same reform would introduce regional wholesale electricity pricing and government financial support intended to reduce KEPCO’s burden. Industrial power accounts for 51% of national electricity use, so the change is large enough to matter materially, but the final regional boundaries and the size of the offsets are not yet settled.

Second-quarter profit setbackSecond-quarter profit fell sharply, weakening confidence that the earnings recovery will continue smoothly.

On August 12, KEPCO reported second-quarter operating income of ₩1.13 trillion, down about 47% from a year earlier, while net income attributable to shareholders fell to ₩267 billion from ₩1.14 trillion. First-half operating income was ₩4.91 trillion, down about 17%. The U.S.-traded depositary share fell about 3.4% on the release day and another 3.1% the next session. That timing is consistent with investor disappointment, but it does not prove the earnings release alone caused the decline.

Third-quarter tariff heldThe government kept the fuel charge high despite lower formula costs, supporting near-term cash recovery.

On June 22, KEPCO kept the fuel-cost adjustment at +₩5 per kilowatt-hour for the third quarter, the maximum positive adjustment and unchanged since 2022. The formula would otherwise have cut the adjustment to minus ₩3.4 per kilowatt-hour, but the government cited KEPCO’s financial condition and unrecovered past fuel costs. Holding the charge protects revenue and cash generation at a time when debt remains heavy. It also shows that tariff policy, not just electricity demand, remains central to shareholder value.

Loading local price history

Revenue

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Net income

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Free cash flow

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Total cash / debt

CashTotal debt

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	₩96.57T	₩92.58T	₩87.48T	₩70.55T	₩60.01T	₩57.93T	₩58.57T	₩60.03T	₩59.34T	₩59.76T	₩58.58T
Gross profit	₩15.86T	₩10.61T	−₩2.22T	−₩30.36T	−₩3.63T	₩6.12T	₩788.25B	₩1.83T	₩7.24T	₩14.21T	₩13.12T
Gross margin	16.43%	11.47%	−2.54%	−43.03%	−6.05%	10.57%	1.35%	3.04%	12.20%	23.78%	22.40%
Research & development	₩39.80B	₩773.93B	₩717.56B	₩727.81B	₩689.40B	₩700.64B	₩735.72B	₩723.89B	₩721.44B	₩705.50B	₩611.22B
Operating expenses	₩2.29T	₩2.15T	₩2.02T	₩1.88T	₩2.09T	₩2.02T	₩2.50T	₩2.51T	₩1.92T	₩1.92T	—
Operating income	₩13.57T	₩8.46T	−₩4.25T	−₩32.24T	−₩5.72T	₩4.10T	−₩1.71T	−₩685.11B	₩5.32T	₩12.30T	₩20.28T
Operating margin	14.05%	9.14%	−4.85%	−45.70%	−9.54%	7.07%	−2.92%	−1.14%	8.97%	20.58%	34.62%
EBITDA	₩29.72T	₩22.46T	₩8.79T	−₩19.78T	₩6.22T	₩15.65T	₩9.42T	₩9.34T	₩15.09T	₩21.26T	₩28.62T
EBITDA margin	30.77%	24.26%	10.05%	−28.04%	10.36%	27.01%	16.09%	15.56%	25.44%	35.57%	48.86%
Net income	₩8.54T	₩3.62T	−₩4.72T	−₩24.43T	−₩5.22T	₩2.09T	−₩2.26T	−₩1.17T	₩1.44T	₩7.15T	₩13.42T
Net profit margin	8.85%	3.91%	−5.39%	−34.63%	−8.69%	3.61%	−3.86%	−1.96%	2.43%	11.96%	22.90%
Basic EPSper basic share	₩6,655.50	₩5,439.00	-₩7,512.00	-₩38,112.00	-₩8,263.00	₩3,102.00	-₩3,654.00	-₩2,048.00	₩2,023.00	₩10,980.00	₩20,701.00
Diluted EPSper diluted share	₩6,655.50	₩5,439.00	-₩7,512.00	-₩38,112.00	-₩8,263.00	₩3,102.00	-₩3,654.00	-₩2,048.00	₩2,023.00	₩10,980.00	₩20,701.00