Investment highlights
Despite anemic demand, 1Q20 results should be slightly better than expected. Although power demand is weak, the impact on the unit price of power sales is limited thanks to an improving demand mix. In addition, the lower-than-anticipated power demand and LNG’s growing share of the generation mix can help mitigate the cost burden of carbon emission permits. Plummeting oil prices, an improving generation mix, and frail power demand help to reduce the cost burden associated with energy conversion. We raise our target price to KRW30,000 applying 0.3x P/B, the average multiple in 2018-2019,