South Korean utility major,
Korea Electric Power Corporation
) recorded a net loss of KRW 1.59 trillion (US$1.43 billion) in
second quarter 2013 compared with a net loss of KRW 1.77 trillion
(US$1.59 billion) in the year-ago period. The company narrowed
down its losses as it raised its electricity prices along with
lower fuel cost realization.
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During the second quarter, operating revenues increased 15.9%
year over year to KRW 11.68 trillion (US$10.51 billion). Overall
operating loss amounted to KRW 1.09 trillion (US$0.98 billion),
narrowing from an operating loss of KRW 2.06 trillion (US$1.85
billion) in the comparable prior- year quarter. Korea Electric
increased power prices by an average 4% in January after a 4.9%
gain in August last year as fuel costs surged.
During the first half of 2013, total operating revenue increased
10.7% year over year to KRW 25.48 trillion (US$22.93 billion).
The sale of electricity, the principal component of operating
revenues, increased 11.2% to KRW 23.72 trillion (US$21.35
billion). Other revenues from the overseas business increased
5.4% year over year to KRW 1.08 trillion (US$9 million).
On the cost arena, over the six-month period, purchased power
cost was up 8.2%, while unit cost of fuel declined 6.9% and fuel
cost was down 2.2%. Overall operating loss narrowed to KRW 436
billion (US$0.39 million) from an operating loss of KRW 2.30
trillion (US$2.07 billion) in the comparable six-month period in
Korea Electric Power is an integrated electric utility engaged in
the generation, transmission and distribution of electricity in
South Korea. The company is the dominant player in Korea's
electricity sector. It continues to be well-positioned to
capitalize on growth opportunities in this market and to benefit
from the industry restructuring initiatives of the Korean
Higher electricity tariff rates, higher electricity volume sales
and an improving overseas business will all add to the growth
story. However, this would be offset by increased price of
purchased power and uncertainty surrounding pending regulatory
Korea Electric Power currently carries a Zacks Rank #4 (Sell).
Investors can consider these well-placed stocks like
Huaneng Power International, Inc.
UNS Energy Corporation
Alliant Energy Corporation
). While Huaneng Power and UNS Energy carry a Zacks Rank #1
(Strong Buy), Alliant Energy holds a Zacks Rank #2 (Buy).