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Hana Securities: KEPCO's Government Support Insufficient for Long-Term Investment Capacity
Utilities · Electric Utilities · yonhap_finance · 2026-09-02
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Hana Securities notes that while recent government financial support for KEPCO is positive, it falls short of addressing long-term capital needs and debt limits.
What Happened
Limited Government Support: Hana Securities views the government's inclusion of 500 billion won in capital injection and 350 billion won in welfare subsidies for KEPCO in the 2027 budget as a positive step. However, analyst Yoo Jae-sun warns that this amount is insufficient to secure mid-to-long-term investment capacity or resolve the upcoming expiration of bond issuance limits.
Rising Investment Burden: With transmission and substation investment costs projected to reach up to 124.3 trillion won due to rising power demand, KEPCO faces significant financial pressure. The firm expects KEPCO to increasingly rely on private Build-Transfer (BT) models to manage these infrastructure costs.
Long-term Cost Implications: While utilizing private capital may alleviate short-term liquidity issues, it is likely to increase overall costs in the long run due to higher financing margins required by private entities. Furthermore, the introduction of a government-led renewable energy bidding market could threaten KEPCO's sales volume in the long term.
Investment Outlook: Hana Securities maintains a 'Buy' rating on KEPCO with a target price of 45,000 won. The firm continues to monitor the company's financial health amid structural challenges in the power sector and evolving regulatory environments.