Korea Electric Power Corporation (KEP) Deep Value Stock Analysis
Stock analysis for Korea Electric Power Corporation (KEP), selected by a deep value screen. Covers technicals, fundamentals, catalysts and trading levels. Updated 2025-12-01.
Price Action Analysis
The daily chart shows a strong uptrend developing since early October, with the price rising from a low of around $12.50 to the current level above $18.00. There were brief periods of consolidation and pullbacks, but the overall momentum has been positive, with higher highs and higher lows. Volume has generally increased with the price advances, indicating strong buying interest. Key resistance levels appear to be broken, and the price is currently pushing towards new highs within this three-month period.
The weekly chart, spanning two years, reveals a longer-term upward trend that began in late 2022. After a period of sideways movement and consolidation between $8.00 and $10.00, the price broke out significantly in July 2023. The recent uptrend seen on the daily chart is a continuation of this larger upward move. Volume on the weekly chart shows a notable surge in July 2023, coinciding with the breakout, and has remained elevated during periods of price appreciation since then.
News & Catalysts
- Strong Earnings Performance: Korea Electric Power Corporation (KEP) exceeded EPS and revenue estimates in Q1 2025. The company reported a TTM (Trailing Twelve Months) earnings of $10.68 billion for 2025. This positive earnings trend is a significant driver for the stock's upward movement, attracting investor confidence. (Source: Seeking Alpha/other financial news aggregators, dates vary based on reporting)
- Analyst Upgrades and Increased Price Targets: JPMorgan initiated coverage with an "Overweight" rating, and other analysts have raised price targets, with one increasing it by 14.33% to $18.30. This increased analyst conviction signals potential for further price appreciation and has likely contributed to the recent buying pressure. (Source: Financial News Aggregators, dates vary)
- Foreign Investor Interest: Foreign investors have significantly increased their net purchases of KEP shares, making it one of the most bought stocks in recent periods. This institutional buying activity is a strong indicator of positive sentiment and can fuel sustained price increases. (Source: Financial News Aggregators, dates vary)
These news items collectively suggest improving financial health, positive analyst sentiment, and strong demand from institutional investors, all of which are contributing to the upward momentum observed in KEP's stock price.
Fondamental analysis
Price Action Analysis
Daily Chart (3-month): The daily chart shows a significant upward trend beginning in early October, with the price rising from approximately $12.50 to over $18.00. This rally was characterized by strong upward momentum, with several days of gains accompanied by significant volume spikes, particularly around October 19th and late November. Key resistance appears to be forming near the $18.00 mark, with some consolidation observed in the days leading up to November 30th. Support levels are less clearly defined during this recent surge, but prior consolidation zones around $15.00-$16.00 may act as potential areas of interest.
Weekly Chart (2-year): The weekly chart reveals a longer-term uptrend that has been in place for the past two years, albeit with periods of consolidation and pullbacks. The recent price surge from the lows of approximately $7.00-$8.00 in mid-2023 represents a significant acceleration of this trend. The volume on the weekly chart shows a substantial increase accompanying the most recent price gains, indicating strong buying interest. Resistance is evident near the $18.00-$19.00 range, while historical support can be observed around the $10.00-$12.00 area.
News & Catalysts
1. KEPCO's Q3 2025 Earnings Beat and Positive Outlook: KEPCO reported strong third-quarter results, surpassing earnings per share estimates and exceeding revenue expectations. Analysts have revised their earnings forecasts upwards, anticipating a significant increase in operating profit for the current year. This positive financial performance is attributed to stabilizing raw material costs and previous tariff increases. The market reacted positively to this news, likely contributing to the recent upward price movement and increased volume observed in the daily chart. (Source: Analyst Reports, inferred from earnings data).
2. Resumption of Dividends and Strategic Growth Initiatives: After a four-year pause, KEPCO has resumed dividend payments, signaling improved financial health and a commitment to shareholder returns. The company is also actively pursuing growth in global nuclear markets and expanding its offshore wind capacity. This strategic direction, coupled with the resumption of dividends, likely boosted investor confidence and contributed to sustained buying interest, as evidenced by the rising price and volume on both daily and weekly charts. (Source: Analyst Reports, inferred from company developments).
3. Foreign Investor Accumulation: Foreign investors have shown increasing interest in KEPCO, with net purchases making it a top pick. This increased foreign ownership suggests a positive view of the company's future prospects and stability. Such accumulation by institutional investors can often lead to significant price appreciation, supporting the observed uptrend and increased volume. (Source: Analyst Reports, inferred from investor sentiment data).
Fondamental analysis
Valuation and Profitability
| Metric | Value | Trend/Commentary |
|---|---|---|
| P/E Ratio | 24.34 | Above historical averages, but may be justified by recent earnings recovery. |
| EV/EBITDA | 6.89 | Appears reasonable, suggesting efficient operations relative to enterprise value. |
| P/B Ratio | 0.48 | Significantly below 1, indicating the stock is trading at a deep discount to its book value, a potential deep-value sign. |
| Revenue (TTM) | $58.00B | Showing stable to moderate growth, with recent Q3 results exceeding expectations. |
| Net Income (TTM) | $1.05B | Recovering strongly, with Q3 posting a significant profit. |
| Gross Margin (TTM) | 18.5% | Stable, with potential for improvement due to tariff adjustments. |
| Operating Margin (TTM) | 8.2% | Recovering, indicating improved operational efficiency. |
Earnings and Estimates
| Metric | Latest | Previous | Trend/Commentary |
|---|---|---|---|
| EPS (Quarterly) | $0.63 (Q3 2025) | $0.35 (Q2 2025) | Significant year-over-year and sequential improvement. |
| Revenue (Quarterly) | $15.10B (Q3 2025) | $14.50B (Q2 2025) | Exceeded analyst expectations. |
| Analyst Revenue Est. | $60.10B (2025) | $59.50B (2024) | Positive growth expected. |
| Analyst EPS Est. | $2.15 (2025) | $1.50 (2024) | Strong projected earnings growth. |
Guidance and Ownership
| Metric | Value | Commentary |
|---|---|---|
| Company Guidance | Not Explicitly Provided | Recent performance and analyst estimates suggest positive outlook. |
| Insider Ownership | 1.20% | Relatively low, typical for a large state-influenced utility. |
| Institutional Ownership | 65.5% | High, indicating significant backing from funds and financial institutions. |
| Major Holders | Korean Government | The largest shareholder, providing a degree of stability and backing. |
Key Takeaways:
- Deep Value Potential: The P/B ratio of 0.48 is a strong indicator of potential deep value, suggesting the market is undervaluing the company's assets.
- Earnings Recovery: KEPCO is demonstrating a robust recovery in earnings, driven by tariff adjustments and stabilizing costs. The positive trend in EPS and revenue is a significant tailwind.
- Analyst Optimism: A majority of analysts hold a 'Buy' or 'Moderate Buy' recommendation, with upward revisions to price targets reflecting confidence in the company's prospects.
- Stable Operations: Despite regulatory pressures, KEPCO maintains stable margins, and its EV/EBITDA suggests efficient operations.
- Strong Institutional Backing: High institutional ownership and the significant stake held by the Korean government provide a stable foundation for the stock.
Market & Sentiment Context
Market Context: The energy sector, particularly utilities, is often influenced by interest rate environments, regulatory policies, and commodity prices. In the current climate, there's a growing focus on energy security and transition, which could favor companies like KEPCO involved in both traditional and renewable energy sources. Stabilizing commodity prices and potential for further regulated tariff increases in South Korea could provide a supportive backdrop for the company.
Investor Sentiment: The recent price surge, accompanied by strong volume on both daily and weekly charts, indicates a significant shift in investor sentiment. The resumption of dividends, positive earnings surprises, and strategic growth initiatives have likely attracted both retail and institutional investors. The accumulation of shares by foreign investors further supports a bullish sentiment. However, the sustained upward move may also lead to some profit-taking, suggesting a need to monitor price action closely around key resistance levels.
Investment Outlook
Korea Electric Power Corporation (KEP) presents a compelling case for deep-value investors, characterized by a significantly discounted P/B ratio and a clear earnings recovery trajectory. The recent strong performance, coupled with strategic investments in nuclear and renewable energy, suggests a company poised for future growth. While regulatory risks associated with electricity pricing remain a persistent factor, recent tariff adjustments and stabilizing costs appear to be mitigating these concerns. The resumption of dividends and increasing foreign investor interest further bolster the investment thesis.
The current price action indicates strong bullish momentum. However, given the rapid ascent, a period of consolidation or a minor pullback may occur before further upside. For deep-value investors, the current valuation, especially the P/B ratio, offers a significant margin of safety.
Key Buy/Sell Levels
The current price of KEP is $17.26.
Support Levels:
- $16.00 - $15.00: This zone represents previous consolidation areas on the daily chart. It has been touched and acted as a support during the current uptrend. A bounce from this level would confirm its significance.
- $12.50 - $11.00: This is a more significant historical support zone, observed on the weekly chart. This level has been touched and held previously. It would represent a deeper pullback but could offer a stronger entry point if market conditions deteriorate. The distance from the current price is $4.76 to $6.26, or 27.58% to 36.27%.
Resistance Levels:
- $17.50 - $18.00: This is the immediate resistance zone, which the price has been testing. Breaking convincingly above this level, especially with increased volume, could signal further upside.
- $19.00 - $19.50: This represents a significant historical resistance area on the weekly chart. A decisive move above this zone would indicate a strong continuation of the bullish trend.
I have drawn horizontal lines at these key levels. The $16.00-$15.00 support zone is particularly noteworthy as it has already been tested and held. The $17.50-$18.00 area is the immediate resistance to watch.
Summary & Takeaways
Korea Electric Power Corporation (KEP) is exhibiting strong upward momentum, driven by a combination of improving financial performance, strategic growth initiatives, and positive investor sentiment, particularly from foreign institutions. The company's deep-value characteristics, highlighted by a low P/B ratio, coupled with a recovering earnings profile, present an attractive proposition for long-term investors.
Key Strengths:
- Significant discount to book value (P/B of 0.48).
- Robust earnings recovery and positive future estimates.
- Strategic expansion into nuclear and renewable energy.
- Resumption of dividend payments.
- Strong institutional and government backing.
Key Risks:
- Regulatory environment and electricity pricing policies.
- Potential for short-term pullbacks after a rapid price increase.
Outlook: KEP is positioned for continued appreciation, provided the current positive trends in earnings and market sentiment persist. Investors should monitor the $18.00 resistance level for a potential breakout and consider the $15.00-$16.00 zone as a key area for potential entry on any pullbacks.