PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,542 per share · Prices as of the 2026-10-02 close
After escaping massive losses in 2022 and recovering to a double-digit operating margin in 2025, KEPCO saw quarterly profits shrink rapidly in the first half of 2026 on higher fuel costs, putting tariff policy and overseas nuclear projects in focus at the same time.
For 2025, consolidated revenue reached KRW 97.43tn and operating profit KRW 13.49tn (13.8% operating margin), confirming a profit recovery after the KRW 32.66tn operating loss of 2022.
Second-quarter 2026 operating profit was KRW 1.13tn, about half the KRW 2.14tn of 2Q25, while net profit attributable to owners narrowed to KRW 267.3bn.
The debt-to-equity ratio fell from 543.3% in 2023 to 416.9% in 2025, yet total liabilities remain above KRW 205tn, and reported debt as of 2Q26 stood at KRW 210.7tn.
Costs are largely outside the company's control while tariffs are set through government decisions, making the fuel-cost adjustment unit price, time-of-use tariffs and regional pricing debates the key earnings variables.
Domestic grid investment burdens and overseas nuclear plus data-center demand are operating as opposing forces at the same time.
KEPCO operates Korea's transmission, distribution and retail electricity business, while generation is carried out through Korea Hydro & Nuclear Power and other generation subsidiaries within the group structure.
Most revenue comes from electricity sales: of KRW 46.32tn in consolidated first-half 2026 revenue, power-sales revenue was KRW 43.96tn, while other revenue including overseas business rose 16.7% to KRW 2.35tn.
On the cost side, subsidiary fuel costs and purchased power from independent generators are the two pillars: in the first half of 2026 fuel costs rose 8.8% to KRW 10.14tn, purchased-power costs fell 0.9% to KRW 17.21tn, and depreciation rose 1.3% to KRW 5.95tn.
Profit is therefore determined by the gap between regulated selling tariffs and fuel plus wholesale power prices, and the inability to raise its own tariffs makes the company fundamentally different from listed manufacturers.
On volumes, first-half 2026 power sales fell 0.6% year on year to 266.7 terawatt-hours, which management attributed to weaker industrial demand amid an economic slowdown.
On unit prices, 2025 sales volume slipped 0.1% to 549.4 terawatt-hours while the average selling price rose 4.6% from KRW 162.9 to KRW 170.4 per kilowatt-hour.
The group also includes non-generation affiliates such as KEPCO E&C for nuclear design, KEPCO KPS for maintenance, and the nuclear fuel unit, spanning the entire nuclear value chain.
For overseas nuclear exports, KEPCO handles 19 countries such as the United States, the United Kingdom and Saudi Arabia where the Korean reactor design can be used as is, while KHNP covers 32 countries including the Czech Republic and Poland that require design modifications.
Domestically it faces virtually no competitor in retail electricity, but tariffs, investment and dividends are all heavily shaped by policy decisions.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩22T | ₩2.1T | 9.7% |
| 2025Q3 | ₩27.6T | ₩5.7T | 20.5% |
| 2025Q4 | ₩23.7T | ₩1.9T | 8.2% |
| 2026Q1 | ₩24.4T | ₩3.8T | 15.5% |
| 2026Q2 | ₩21.9T | ₩1.1T | 5.1% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩71.3T | -₩32.7T | -₩24.5T | −45.8% | −60.3% | 459.1% |
| 2023 | ₩88.2T | -₩4.5T | -₩4.8T | −5.1% | −13.5% | 543.3% |
| 2024 | ₩93.4T | ₩8.4T | ₩3.5T | 9.0% | 8.7% | 496.7% |
| 2025 | ₩97.4T | ₩13.5T | ₩8.5T | 13.8% | 17.7% | 416.9% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04
On an annual basis, after the extreme year of 2022 with revenue of KRW 71.26tn and an operating loss of KRW 32.66tn (-45.8% margin), the operating loss narrowed to KRW 4.54tn in 2023, then profits recovered to KRW 8.36tn (9.0%) in 2024 and KRW 13.49tn (13.8%) in 2025.
Net profit attributable to owners was KRW 8.54tn in 2025 and operating cash flow reached KRW 20.88tn, a clear recovery in cash generation versus KRW 1.52tn in 2023.
The balance sheet also improved, with the debt-to-equity ratio falling from 543.3% in 2023 to 496.7% in 2024 and 416.9% in 2025, though total liabilities of KRW 205.60tn remain very large in absolute terms.
Behind the 2025 improvement, a 13.4% decline in average LNG import prices pushed the system marginal price down 12.2% from KRW 128.4 to KRW 112.7 per kilowatt-hour, cutting subsidiary fuel costs by KRW 3.10tn and purchased power from private generators by KRW 607.2bn.
Quarterly results are highly seasonal: third-quarter 2025 revenue of KRW 27.57tn and operating profit of KRW 5.65tn (20.5% margin) was the strongest of the past five quarters, followed by KRW 1.95tn in 4Q25 and KRW 3.78tn in 1Q26.
In second-quarter 2026, however, revenue of KRW 21.92tn produced operating profit of just KRW 1.13tn (5.1% margin) and net profit attributable to owners of KRW 267.3bn.
In its half-year results the company said consolidated operating profit of KRW 4.91tn was down 16.6% from KRW 5.89tn a year earlier, as revenue rose 0.3% but operating costs grew faster because the conflict between the United States and Iran lifted both LNG and thermal coal prices.
Notably, second-quarter operating profit on a parent-only basis was only KRW 36.1bn, about 4% of the KRW 956.6bn a year earlier, and observers noted that without roughly KRW 1.4tn of cumulative self-help measures in the first half, staying in the black might have been difficult.
In short, the profit recovery of 2024 and 2025 driven by falling fuel costs is being partly given back as input costs rose in the first half of 2026.
The power sector cycle is driven by the lag between fuel prices and currency moves on one side and regulated tariffs on the other, and the industry is currently in a phase where rising costs are not immediately passed through.
According to press reports, the average daily wholesale power price reached KRW 147.75 per kilowatt-hour on August 1 and stayed above the KRW 146 level widely regarded as breakeven, prompting comments that a quarterly loss could not be ruled out if that structure persisted.
On price indicators, iM Securities said in an August 2026 report that although oil prices had fallen since June, the Asian gas benchmark JKM was rising more steeply, so further increases through year-end deserved more weight.
On tariff mechanics, the fuel-cost adjustment unit price for the first quarter of 2026 was kept at KRW 5 per kilowatt-hour, with the government citing the company's financial position and unrecovered adjustment balances while also instructing thorough implementation of self-help measures.
On structural reform, seasonal and time-of-use pricing took effect on April 16, 2026, industrial users can defer application until September 30, 2026, and from October 1 the same rules apply to all industrial customers.
On the demand side, 150 new data centers seeking power supply by 2030 would require a combined 9.36 gigawatts, roughly 4.7 times the 1,986 megawatts of receiving capacity at currently operating data centers, and the 12th basic power supply plan set out a direction of steering projects outside the capital region on the premise of regional electricity pricing.
Within the generation mix, nuclear utilization is central to margins: Kiwoom Securities noted in a February 2026 report that KHNP had set a 2026 nuclear utilization target of 89%, with new operation of Kori Unit 2 and Saeul Unit 3 also scheduled.
Unlike many overseas utilities, the operator does not control its own tariffs, which is both a structural feature and the starting point of the valuation debate.
In its first-half results the company took a cautious stance on second-half cost conditions. A KEPCO official said that if higher international fuel prices from the Middle East conflict and a weak currency fully materialize in the second half, the pace of financial normalization would inevitably slow.
As a response, the company pointed to power-market reforms to reduce purchased-power costs, intensive self-help measures, diversified funding, restructuring of seasonal and time-of-use tariffs, review of regional pricing, and timely build-out of the national grid.
On the regulatory calendar, time-of-use pricing for industrial users is scheduled to apply uniformly to all businesses from October 1, 2026, so its direction and magnitude for the average selling price is a checkpoint from the second half onward.
On the nature of tariff reform, KB Securities analyst Jung Hye-jung commented in February 2026 that a reform lowering daytime rates and raising evening rates could be a near-term tariff-reduction factor, while the regional differential pricing under discussion would be expected to lift the average selling price.
In overseas business, the Ministry of Trade, Industry and Energy announced a memorandum of understanding between KEPCO and PetroVietnam to review potential nuclear development cooperation, described as a step forward from earlier workforce-training cooperation toward concrete feasibility review.
On the export framework, KEPCO and KHNP are reported to be in London Court of International Arbitration proceedings over KRW 1.4tn of additional construction costs at the Barakah project, while the government plans to complete its study on unifying the export channel and then sort out responsibilities.
On demand, the special act on artificial-intelligence data centers passed the National Assembly on May 7, 2026 and is set to take effect in February 2027 after a nine-month grace period. Ultimately, second-half results are likely to hinge on the combination of fuel and currency, nuclear utilization, and tariff policy.
Valuation here depends less on the absolute level of profit than on judgments about the volatility and durability of that profit.
After swinging from the massive 2022 loss to profits in 2024 and 2025, earnings over the most recent four quarters remain sizeable, but quarters like the second of 2026, when the operating margin fell into single digits, can recur, so the multiple itself is hard to treat as a stable anchor.
Relative to book value, the shares trade below net asset value per share, and Daishin Securities stated in a May 2026 report that it applied a discount to the 0.56 times average peak price-to-book ratio of 2014 to 2016, a period of eased tariff regulation and improving financial structure.
Shareholder returns are still limited: Kiwoom Securities analyst Cho Jae-won said the 2025 payout ratio was set at 13.65%, down 2.85 percentage points from the prior year, and projected that 2026 would bring growth similar to the earnings growth rate rather than a sharp payout improvement.
Brokerage views diverge. iM Securities said in an August 2026 report that it cut its target price to KRW 48,000 on second-half fuel and purchased-power cost burdens while maintaining its rating, and KB Securities in an April 2026 report lowered its target price from KRW 74,000 to KRW 63,000 and cut its 2026 and 2027 operating profit forecasts by around 30% each.
By contrast, Eugene Investment & Securities maintained a target price of KRW 92,000 and a buy rating in a May 2026 report, forecasting that the direction of tariff reform after local elections and progress in Korea-United States nuclear cooperation would be the key variables.
PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04
Operating cash flow reached KRW 20.88tn in 2025, far above KRW 1.52tn in 2023 and KRW 15.88tn in 2024. Total equity grew from KRW 37.26tn in 2023 to KRW 49.32tn in 2025 while the debt-to-equity ratio fell from 543.3% to 416.9%.
As long as profits hold up, more room exists to fund interest costs and investment internally. That said, total liabilities of KRW 205.60tn have not actually declined.
Instead of direct tariff hikes, structural reform is under way. KB Securities analyst Jung Hye-jung commented in February 2026 that the regional differential pricing under discussion could be expected to lift the average selling price.
Time-of-use pricing for industrial users is scheduled to apply uniformly to all businesses from October 1, 2026, allowing investors to track when the effect shows up in results. Selling prices already have a track record of moving: in 2025 the average price rose 4.6% from KRW 162.9 to KRW 170.4 per kilowatt-hour.
150 new data centers seeking power supply by 2030 would require a combined 9.36 gigawatts, about 4.7 times the 1,986 megawatts of receiving capacity at data centers currently in operation.
In overseas nuclear, the Ministry of Trade, Industry and Energy announced a memorandum of understanding between KEPCO and PetroVietnam to review possible nuclear development cooperation. The company holds nuclear design, maintenance and fuel affiliates, giving the group broad participation scope if projects advance. Still, converting such cooperation into signed contracts and revenue takes considerable time.
Second-quarter 2026 operating profit of KRW 1.13tn was about half the KRW 2.14tn of 2Q25, with the operating margin down to 5.1%. The company explained that while first-half power sales volumes fell only slightly, fuel costs rose sharply because international thermal coal prices increased.
The fuel-cost adjustment unit price is set through government notification and was again kept at KRW 5 per kilowatt-hour for the first quarter of 2026. The absence of an immediate pass-through mechanism when costs rise is a structural weakness.
Total liabilities actually rose from KRW 192.80tn in 2022 to KRW 205.60tn in 2025. Press reports put debt at KRW 210.7tn as of the second-quarter 2026 close. Reports also flagged the push for regional differential pricing and growing transmission-grid construction burdens as financial pressure points. If large-scale investment continues while profits shrink, the pace of balance-sheet improvement could slow.
Kiwoom Securities analyst Cho Jae-won noted the 2025 payout ratio fell 2.85 percentage points to 13.65% and projected no sharp improvement in 2026. Shinhan Securities analyst Choi Kyu-heon judged that a firm increase in the payout ratio is difficult without balance-sheet improvement.
The company itself has said financial improvement is necessary to pursue timely investment for stable power supply. Investors should note that higher profits do not automatically translate into a higher payout ratio.
Both the level and the structure of tariffs depend on government decisions. For the first quarter of 2026, the fuel-cost adjustment unit price was kept unchanged in consideration of the company's financial position and unrecovered balances, alongside a demand for thorough implementation of self-help measures.
Analysts have argued that the direction of tariff reform will be a key factor for future earnings. If reform ends up lowering the average unit price, it becomes a downside factor for profit forecasts.
Fuel and purchased-power costs account for most of the expense base. The company said the conflict between the United States and Iran raised both LNG and thermal coal prices, pushing first-half operating costs up more than revenue.
Commentators noted that if wholesale power prices keep running above the level widely regarded as breakeven, a quarterly loss cannot be ruled out. When nuclear utilization falls due to preventive maintenance, the share of fossil-fuel generation rises and cost pressure can widen.
Role allocation within the group and settlement of overseas projects remain variables. KEPCO and KHNP are in London Court of International Arbitration proceedings over KRW 1.4tn of additional construction costs at the Barakah project.
Critics point to the split export channel between two entities, and the government is reported to plan sorting this out after completing a unification study. Depending on the outcome, the lead entity and revenue-recognition structure for overseas nuclear business could change.
This is when the government notification on the fourth-quarter 2026 fuel-cost adjustment unit price should be checked. For reference, the first quarter of 2026 was set at KRW 5 per kilowatt-hour, so a comparison indicates whether the government's stance shifts amid rising costs.
The deferral of time-of-use pricing for industrial users ends on September 30, 2026, and from October 1 the same rules apply to all industrial businesses. The impact on the average selling price and industrial demand patterns should be tracked in fourth-quarter and later results.
Third-quarter results are expected around this time. It is seasonally the strongest quarter, with third-quarter 2025 operating profit of KRW 5.65tn (20.5% margin) as the comparison base, and the key question is how much higher fuel costs eroded peak-season margins.
This is when the first-quarter 2027 fuel-cost adjustment decision and progress on regional pricing policy can be checked. The 12th basic power supply plan set out a direction of steering data centers outside the capital region on the premise of regional electricity pricing, so the design details matter.
Full-year 2026 results and the dividend decision are expected to be disclosed around this time. Given the analysis that the 2025 payout ratio was set at 13.65%, how the payout is adjusted amid declining profits is the checkpoint.
KEPCO's past four years traced a steep recovery from a KRW 32.66tn operating loss in 2022 to KRW 13.49tn of operating profit in 2025 (13.8% margin), driven mainly by falling fuel prices and rising selling prices.
Yet the drop from KRW 3.78tn of operating profit in the first quarter of 2026 to KRW 1.13tn in the second shows how quickly profits shrink when the same variables move the other way.
The bullish case rests on operating cash flow above KRW 20tn, a declining debt-to-equity ratio, unit-price effects from tariff restructuring, and the longer-term axes of data-center demand and overseas nuclear cooperation.
The bearish case rests on liabilities above KRW 205tn, expanding grid investment, the structural absence of tariff-setting power, and a low payout ratio.
Some brokerage commentary has argued that while fuel and purchased-power burdens will persist in the second half, a long-horizon approach remains valid given nuclear expansion and data-center power demand.
The checking sequence runs from the fourth-quarter fuel-cost adjustment, to full application of industrial time-of-use pricing in October, to third-quarter results in November, and then the dividend decision. This report is for information purposes and contains no buy or sell opinion or target price.
Report written 2026-09-05 · Data as of 2026-09-04
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