KOSPIEnergy & Power051600

KEPCO Plant Service & Engineering

₩45,100▲ 2.15%2026-10-02 close

Market Cap

₩2T

Turnover

₩3.7B

Volume

80,000 shares

Shares out.

45M

PER

15.9×

PBR

1.5×

EPS

₩2,885

Dividend Yield

3.60%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,651 per share · Prices as of the 2026-10-02 close

Report overview

Nuclear maintenance volume growth versus cost pressure

Volume from nuclear planned preventive maintenance is lifting the top line only gradually, while material and labor costs have swung operating margins sharply since 2025, making the timing of overseas nuclear maintenance revenue recognition the key variable.

1
In 2025 consolidated revenue rose slightly to 1,576.5 billion won from 1,557.1 billion won, but operating profit fell to 140.1 billion won from 209.5 billion won in 2024, with the operating margin easing from 13.5 percent to 8.9 percent.
2
Quarterly results are volatile: the fourth quarter of 2025 bottomed at 440.8 billion won of revenue and 19.3 billion won of operating profit, a 4.4 percent margin, before recovering to 37.0 billion won in the first quarter of 2026 and 43.6 billion won in the second, still below the 65.6 billion won posted in the second quarter of 2025.
3
The core nuclear and pumped-storage maintenance segment generated 630.6 billion won of revenue in 2025, roughly 40 percent of consolidated sales, and is generally cited as the higher-margin business.
4
Overseas, the company won a 485 billion won Cernavoda pressure-tube retubing and refurbishment contract from KHNP in August 2025, equal to 31.1 percent of the prior year's revenue and running to 30 June 2030, while a maintenance contract for Dukovany units 5 and 6 in the Czech Republic is flagged as a second-half event to watch.
5
The balance sheet is light, with a 26.6 percent debt-to-equity ratio in 2025, and the corporate value enhancement plan disclosed in March 2026 set out a policy of keeping the payout ratio above 50 percent, which also means earnings swings pass straight through to the dividend pool.

Business structure

KEPCO KPS is a listed state-owned enterprise specializing in maintenance of power generation and transmission facilities in Korea, majority-owned by Korea Electric Power Corporation.

It performs full-responsibility maintenance on hydro and thermal plants, nuclear plants, renewable facilities and transmission assets; after starting with Kori nuclear maintenance in 1978, it localized core maintenance technology through a nuclear maintenance technology center in the 1990s and now handles maintenance for all domestic nuclear units.

The portfolio splits into nuclear and pumped-storage maintenance, thermal maintenance, transmission and substation maintenance, overseas projects, and external work for private generators, and nuclear and pumped-storage maintenance generated 630.6 billion won in 2025, about 40 percent of consolidated revenue of 1,576.5 billion won.

Much of the revenue base is tied to orders from the KEPCO group, including KHNP and the five generation subsidiaries; in July 2025 it signed four maintenance contracts with KHNP covering Hanbit 3 and 4, Saeul 1 and 2, Shin-Hanul 1 and 2 and multi-unit mechanical and electrical maintenance, totaling 910.3 billion won and running to 30 June 2027.

The thermal business centers on planned preventive maintenance plus performance upgrades and life-extension works, where the timing of material input can dominate quarterly margins.

In overseas work, it has performed commissioning maintenance at the Barakah plant in the United Arab Emirates since 2013, contributing to commercial operation of units 1 through 4, participates in routine and planned preventive maintenance there, and joined Team Korea in the preferred-bidder selection for new Czech units.

On competition, parts of the domestic maintenance market are open to private specialists, but high-difficulty areas such as primary-side major component work in nuclear plants carry barriers built on accumulated manpower and technology.

Its position in the nuclear value chain also differs from peers: because reactors operate for decades after construction ends, maintenance demand recurs continuously, so the business is better framed through growth in operating assets than through the construction cycle.

On new business, it is participating in the decommissioning of Kori unit 1, the first such project in Korea, which is cited as an entry point to the decommissioning market.

Earnings trend

Quarterly revenue · Operating profit

₩454B₩65.6B25Q2₩393.7B₩47.4B25Q3₩440.8B₩19.3B25Q4₩352.4B₩37B26Q1₩437.9B₩43.6B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩1.4T₩130.6B2022₩1.5T₩199.4B2023₩1.6T₩209.5B2024₩1.6T₩140.1B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩454B	₩65.6B	14.5%
2025Q3	₩393.7B	₩47.4B	12.0%
2025Q4	₩440.8B	₩19.3B	4.4%
2026Q1	₩352.4B	₩37B	10.5%
2026Q2	₩437.9B	₩43.6B	10.0%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩1.4T	₩130.6B	₩100.2B	9.1%	8.2%	28.5%
2023	₩1.5T	₩199.4B	₩162.7B	13.0%	12.8%	25.5%
2024	₩1.6T	₩209.5B	₩172.4B	13.5%	13.0%	27.2%
2025	₩1.6T	₩140.1B	₩124.2B	8.9%	9.2%	26.6%

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

Earnings analysis

Consolidated revenue reached 1,576.5 billion won in 2025, extending a gradual climb from 1,429.1 billion won in 2022, 1,533.9 billion won in 2023 and 1,557.1 billion won in 2024, but operating profit dropped clearly to 140.1 billion won from 209.5 billion won in 2024.

The operating margin, which had risen from 9.1 percent in 2022 to 13.0 percent in 2023 and 13.5 percent in 2024, retreated to 8.9 percent in 2025, and net profit attributable to owners fell to 124.2 billion won from 172.4 billion won.

The bulk of the decline sat in the fourth quarter, when revenue of 440.8 billion won produced only 19.3 billion won of operating profit, a 4.4 percent margin.

On this, Kiwoom Securities in a February 2026 report separated the concentration of equipment purchase costs tied to completion of a cogeneration plant life-extension project, treated as one-off, from rising planned preventive maintenance material costs caused by aging thermal plants, treated as structural.

Margins recovered in the first quarter of 2026, with revenue of 352.4 billion won and operating profit of 37.0 billion won, a 10.5 percent margin, and Kiwoom Securities attributed this to nuclear units under planned preventive maintenance rising from five in the first quarter of 2025 to thirteen in the first quarter of 2026.

The second quarter of 2026 brought revenue of 437.9 billion won and operating profit of 43.6 billion won, both below the second quarter of 2025 at 454.0 billion won and 65.6 billion won, while net profit attributable to owners slipped from 50.9 billion won to 38.3 billion won.

As background, KB Securities pointed to a lower revenue recognition rate in nuclear maintenance as schedules for long-cycle planned preventive maintenance units were extended, plus expanded short-term labor hiring as thermal maintenance schedules overlapped.

Summing the four quarters from the third quarter of 2025 through the second quarter of 2026 gives revenue of 1,624.9 billion won, operating profit of 147.3 billion won and net profit attributable to owners of 129.8 billion won, a slightly higher earnings level than full-year 2025.

On the balance sheet, equity of 1,345.9 billion won against liabilities of 357.7 billion won at end-2025 kept the debt-to-equity ratio at a low 26.6 percent, but operating cash flow swung widely with working capital, from negative 38.1 billion won in 2023 to 540.5 billion won in 2024 and 135.7 billion won in 2025.

Industry analysis

Maintenance demand is driven less by new construction than by the maintenance cycle of operating assets, and 2026 has been presented as an upswing year. Mirae Asset Securities noted that planned preventive maintenance in 2026 was set to rise from 87 to 101 thermal units and from 13 to 20 nuclear units versus 2025.

Businesspost reported that although the number of nuclear planned preventive maintenance units in 2026 is the same 23 as in 2025, the effective volume flowing into revenue is expected to grow roughly 10 percent.

Expansion of the operating fleet also broadens the maintenance base: Kiwoom Securities expected the nuclear revenue base to widen as Kori unit 2 and Saeul units 3 and 4 come online in 2026.

On policy, KB Securities described the medium- to long-term outlook as positive, citing a high likelihood that new nuclear units are added in the government's 12th basic plan for electricity supply and demand.

The other side of the cycle is thermal contraction: concerns exist over shrinking thermal maintenance revenue as domestic coal plants are retired and converted to liquefied natural gas, with the question being whether overseas nuclear maintenance can offset the gap.

Its position in the nuclear value chain carries a different timing profile from design and main-equipment suppliers.

Design, equipment and construction revenue arises mostly from early construction through the build period, whereas maintenance revenue begins four to five years before completion and accrues steadily through the operating life, and Kiwoom Securities judged that this makes near-term benefit from Team Korea overseas awards inherently weak.

In short, even when nuclear-theme news moves the group together, the point at which it lands in earnings differs by value-chain position, which is the basic premise for reading this sector.

Outlook

The company's own direction was set out in a corporate value enhancement plan disclosed on 19 March 2026, which laid out revenue targets and shareholder-friendly policy including keeping the dividend payout ratio above 50 percent. Overseas project timing is relatively concrete.

On 21 August 2025 it disclosed a 485 billion won contract from KHNP for Cernavoda pressure-tube retubing and refurbishment, running to 30 June 2030, and Daishin Securities stated that preparatory-work revenue from the project starts in the fourth quarter of 2026.

KB Securities cited October 2027 as the start of the Cernavoda upgrade work and said the company is preparing similar overseas aging-reactor maintenance bids.

As further order events, a maintenance contract for Dukovany units 5 and 6 is expected in the second half, and the company is reviewing both Team Korea and standalone opportunities for entry into the United States, while Daishin Securities assessed that Dukovany-related revenue would arise from 2028 to 2029.

Market estimates diverge: FnGuide put 2026 revenue at 1,643.1 billion won and operating profit at 190.5 billion won, whereas KB Securities in an August 2026 report projected 2026 revenue of 1,626.0 billion won and operating profit of 175.0 billion won.

Cost-side policy variables also remain: KEPCO KPS received a Good (B) grade in the public institution management evaluation announced in June 2026, and Hana Securities explained that operating expenses at the labor-heavy company shift substantially with the evaluation grade, since incentive pay is calculated on a three-year average of grades.

In addition, conversion of subcontracted plant workers to regular employment, pledged by the government after the Taean thermal plant fatality, is described as a priority task after the new chief executive takes office, so how the workforce change flows into costs is a point to verify.

Valuation

PER

15.9×

PBR

1.5×

ROE

10.0%

EPS

₩2,885

BPS

₩29,919

Dividend per share

₩1,651

Earnings-based multiples now reflect a profit level that has recovered over the past four quarters after operating and net profit fell in 2025 from 2024, so the pace of that recovery drives how the multiple reads.

Against net assets the shares trade at a premium, which means the degree to which higher maintenance volume and overseas projects convert into actual revenue is what tests the basis for that premium. Market views on valuation differ.

Daishin Securities, in a report dated May 2026, said it maintained a Buy rating and a 72,000 won target price, applying a 20 times price-to-earnings multiple on 2026 estimates, which it described as a 20 percent premium to the historical average.

Subsequently, Daishin Securities said on 23 July 2026 that it cut its target price to 64,000 won from 72,000 won, reflecting Bank of Korea rate increases and slower-than-expected momentum for entry into the United States market.

Separately, KB Securities said on 11 August 2026 that second-quarter results missed market forecasts, keeping its Buy rating while lowering its target price to 66,000 won.

Because the dividend is linked to a payout-ratio policy, dividend capacity moves with earnings, so dividend-related metrics should be read alongside maintenance volume and the cost structure.

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

Bull factors

Rising maintenance cycle and higher nuclear mix

Mirae Asset Securities stated that 2026 planned preventive maintenance was set to expand from 87 to 101 thermal units and from 13 to 20 nuclear units.

Nuclear is the core axis, contributing 630.6 billion won of revenue in 2025, about 40 percent of the total, and Kiwoom Securities said it expected margin improvement as the relatively profitable nuclear mix rises and cost increases moderate.

Operating margins of 10.5 percent in the first quarter of 2026 and 10.0 percent in the second are indeed a recovery from 4.4 percent in the fourth quarter of 2025.

Overseas nuclear maintenance taking concrete shape

The Cernavoda retubing and refurbishment contract won in August 2025 is worth 485 billion won, equal to 31.1 percent of the prior year's revenue, and preparatory-work revenue was described as starting in the fourth quarter of 2026.

KB Securities judged that with few new domestic thermal plants ahead, overseas nuclear maintenance orders including the Romanian upgrade project, which enters revenue in earnest from 2027, would become the new growth driver. A Dukovany units 5 and 6 maintenance contract and review of United States opportunities are also in progress.

Low leverage and dividend policy

At end-2025, equity of 1,345.9 billion won against liabilities of 357.7 billion won put the debt-to-equity ratio at 26.6 percent, and the metric has stayed within the high-20s range over four years, at 28.5 percent in 2022, 25.5 percent in 2023 and 27.2 percent in 2024.

Even in a year of falling profit, limited borrowing leaves room for project pre-investment and dividend continuity. The corporate value enhancement plan disclosed in March 2026 included a policy of keeping the payout ratio above 50 percent. That said, the absolute dividend amount still tracks the earnings level.

Bear factors

Cost structure swings margins

The 2025 operating margin of 8.9 percent was well below 13.5 percent in 2024, and it slid to 4.4 percent in the fourth quarter of 2025. Kiwoom Securities judged rising planned preventive maintenance material costs from aging thermal plants to be a structural cost increase.

It also noted that overhead spending rose from the second half of 2025 on additional safety manager hiring, which is fixed in nature, so higher volume may not translate directly into margin recovery.

Long-term shrinkage of the thermal maintenance base

Analysts have repeatedly flagged concern that thermal maintenance revenue shrinks as domestic coal plants are retired and converted to liquefied natural gas.

One view holds that ramping projects in South Africa and the Philippines, the start of the Romanian project and possible additional overseas awards could fill the gap left by aging coal plant closures, but that rests on premises not yet confirmed.

The thermal segment also sees revenue and cost move together depending on when upgrade and life-extension works complete.

Long lag between overseas orders and revenue

Maintenance revenue begins four to five years before a reactor is completed and is recognized across the operating period, which carries a large time-value discount.

Daishin Securities assessed that Dukovany-related revenue would arise from 2028 to 2029, and Kiwoom Securities noted that weak near-term benefit from Team Korea overseas awards left its share performance relatively soft versus other domestic nuclear names. That order disclosures do not feed straight into earnings is a structural constraint of this business model.

Risk factors

Safety incidents and regulation

A worker was killed after being caught in machinery at the company's site inside the Taean thermal power plant in June 2025, and another fatality occurred during inspection work at the Bhavnagar thermal plant in India in March 2026, a run of incidents at home and abroad.

The Ministry of Economy and Finance raised the weighting for social-value items such as safety and responsible management from 14 to 20.5 points in the 2025 management evaluation manual, and the industrial-accident prevention weighting rose from 0.5 to 2.5 points, with a clause allowing scores to be zeroed if safety law violations are confirmed in a serious accident.

Incidents can therefore cascade into reputation, evaluation grades and ultimately incentive pay and labor cost calculations.

State-enterprise governance and policy

As a state enterprise majority-owned by KEPCO, decisions on labor costs, dividends and investment are influenced by government policy and the management evaluation framework.

Hana Securities explained that operating expenses at the labor-heavy company vary substantially with the evaluation grade, and that incentive pay is set on a three-year average of grades.

The search for a chief executive was delayed roughly two years after the predecessor's term expired, with a re-opened recruitment process starting on 18 May 2026, adding continuity risk, and delays in forming the labor-management-expert council on direct employment details meant the 31 May 2026 target for completing direct hiring was missed.

Overseas project execution

Overseas nuclear projects have long contract periods and many local permitting and scheduling variables.

For the Czech Dukovany project, local experts argued that actual costs could far exceed the Czech government's estimate and noted that financing costs were excluded from the construction contract, and the fact that the APR1000 being built at Dukovany is the first of its type worldwide was also cited as a cost-increase factor.

Project cost inflation or schedule slippage can affect the revenue recognition timing and profitability of maintenance participants. The second quarter of 2026 already showed how a schedule extension alone can lower quarterly revenue recognition progress.

What to watch next

Late October to November 2026
Third-quarter 2026 results. This is the point to check whether the higher count of completed nuclear and thermal planned preventive maintenance units actually converts into revenue and margin, and whether material, outsourcing and overhead costs, the drivers of the fourth-quarter 2025 margin collapse, are stabilizing.
Fourth quarter of 2026
Whether preparatory-work revenue from the Cernavoda unit 1 retubing and refurbishment project begins, as flagged by Daishin Securities. The point at which the 485 billion won project first appears in the income statement, and its initial margin, will be the first data on overseas profitability.
Fourth quarter of 2026 to first half of 2027
Whether a maintenance contract for Dukovany units 5 and 6 is disclosed, along with its size and term, an event flagged for the second half. No confirmed disclosure has been verified yet, so the contract outcome should be read together with the revenue start point, cited as 2028 to 2029.
February to March 2027
Confirmation of full-year 2026 results, the dividend decision and an update to the corporate value enhancement plan. Points to verify are whether the policy of keeping the payout ratio above 50 percent, set out in the March 2026 disclosure, translates into the actual dividend, and which way the annual operating margin moves from 8.9 percent in 2025.
Mid-June 2027
Announcement of the fiscal 2026 public institution management evaluation. The June 2026 announcement gave the company a Good (B) grade, and grade changes feed into incentive payments and provisions, driving operating expenses at this labor-heavy company, making it a key cost event. Alongside it, whether new nuclear units are reflected in the government's 12th basic plan for electricity supply and demand is worth tracking as a medium-term volume variable.

Overall view

Because KEPCO KPS handles maintenance for every domestic nuclear unit and most other generation assets, its revenue is less volatile than a typical manufacturer, yet 2025 showed how sensitive the business is to costs.

Revenue edged up to 1,576.5 billion won while operating profit fell to 140.1 billion won from 209.5 billion won in 2024, and the fourth-quarter 2025 margin slid to 4.4 percent.

In the first half of 2026, revenue of 790.3 billion won and operating profit of 80.6 billion won brought margins back to the low teens area, but second-quarter 2026 operating profit of 43.6 billion won still trailed the 65.6 billion won of the second quarter of 2025.

The bull case rests on the rising count of planned preventive maintenance units in 2026, from 87 to 101 thermal and 13 to 20 nuclear, the 485 billion won Cernavoda project in Romania, and expectations for a Dukovany maintenance contract.

The bear case rests on structurally rising material costs from aging thermal plants, concern over a shrinking thermal maintenance base as coal generation is reduced, and the long lag as maintenance revenue is recognized in slices from years before completion through the operating life.

Brokerage views have also been trimmed in recent months, as seen in Daishin Securities' target price cut in July 2026 and KB Securities' cut in August 2026.

What remains to be verified is threefold: how much of the added maintenance volume survives as operating margin, when overseas projects begin to book actual revenue, and how the management evaluation grade and the conversion of subcontracted workers flow into labor costs. This report is for information purposes only and contains no investment rating or buy or sell recommendation.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.