Korea Electric Power Corp. (015760.KS), known as KEPCO, has slid more than 32% even as the KOSPI surged over 27% following the U.S.-Iran war, with even a record quarterly operating profit failing to win back investors.
Lone Decliner in Bull Market…Retail Investors Say "40,000 Won Floor Has Collapsed"
According to the Korea Exchange, KEPCO was trading at 38,750 won as of 2:30 p.m. on Wednesday, down 900 won, or 2.27%, from the previous session.
Since the outbreak of the U.S.-Iran war, KEPCO shares have plunged 32.22%. The move stands in stark contrast to the KOSPI, which surged over the same period and broke through the 8,000 mark in early trading on the same day.
Online discussion boards on portal sites have been filled with sighs from individual investors. Comments such as "It's not even an inverse ETF, but it's crashing alone in this record-breaking bull market" and "Buying KEPCO shares was the biggest mistake of my life" have poured in.
Analysts attribute the decline to foreign investors joining the selling spree amid heightened geopolitical instability. According to data from Daishin Securities' home trading system, foreign investors net sold 441.30 billion won worth of KEPCO shares on the main bourse since the U.S.-Iran war broke out. This is the opposite direction from the fourth quarter of last year, when foreigners net bought about 599.5 billion won worth of shares.
Record Q1 Loses Its Shine…Q2 Is the Real Hurdle
According to FnGuide data, the consensus operating profit estimate for KEPCO in the first quarter was 4.2383 trillion won, but actual operating profit came in at 3.7841 trillion won, missing the estimate by 10.7%.
Revenue also fell short of the consensus of 24.7717 trillion won, coming in at 24.3984 trillion won. While revenue rose 0.7% and operating profit increased 0.8% from a year earlier, the figures were branded as missing expectations.
In a press release, KEPCO said, "The impact of the surge in international oil and LNG prices following the Middle East war at the end of February has not yet been reflected in first-quarter earnings," adding, "The impact of the Middle East war will affect earnings and funding with a time lag going forward."
Amid this trend, brokerages have continued to cut their target prices. Among the nine brokerages that issued target prices after the first-quarter earnings release, none raised them.
Four brokerages cut their targets. LS Securities lowered its target from 70,000 won to 50,000 won, while Kiwoom Securities cut its target from 70,000 won to 48,000 won, each by more than 20,000 won. Daishin Securities adjusted its target from 80,000 won to 62,000 won, and iM Securities cut its target from 64,000 won to 53,000 won.
The remaining five brokerages maintained their existing targets. However, the gap among them is significant. Eugene Investment & Securities held the highest target at 92,000 won, while SK Securities offered 40,000 won, a figure not far from the current share price. Meritz Securities (65,000 won), KB Securities (63,000 won), and Hana Securities (45,000 won) fell in between.
Na Min-sik, a researcher at SK Securities, who set the lowest target at 40,000 won, explained, "KEPCO's fuel cost structure typically reflects Dubai crude movements with a two-quarter lag, because it takes about six months for Dubai oil prices to feed through to the system marginal price (SMP)." He added, "On the other hand, the earnings impact from rising oil prices will be directly reflected in profit and loss starting from the second quarter of this year."
Bloomberg Breaking News! The Reality of Kim Yong-beom's "National Dividend" That Sent KOSPI Past 8,000
