KEP - Korea Electric Power plunges after 'insufficient' tariff hike

Korea Electric Power ( NYSE: KEP ) -10.3% in Tuesday's trading after shares in the South Korean state utility plummeted 11% on the country's benchmark Kospi index in their steepest daily decline since the 2008 financial crisis.

The stock's plunge followed the government's decision last week to raise electricity tariffs by 13.1 Korean won per KWh starting January 1, which analysts said is insufficient .

Kepco ( KEP ), which is expected to post 29T won in operating losses in 2022 following a KRW5.89T loss in 2021, would need a tariff increase of KRW51.6/KWh to swing to a profit, SK Securities analyst Na Min-sik said in a note Monday.

The company's operating loss could narrow to KRW4.9T in 2023 from an estimated KRW31T in 2022, according to Meritz Securities analyst Moon Kyeong-won.

Potential positive catalysts for Kepco ( KEP ) include tariff hikes, purchased power cost savings, asset sales and capex optimization, The Value Pendulum writes in an analysis published recently on Seeking Alpha .

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