Kepco hits 29-month high due to hike

The share price of Korea Electric Power Corporation, which supplies all of the nation’s electricity, rose to a 29-month high yesterday after raising power tariffs.

The state-controlled monopoly distributor known as Kepco climbed 3.63 percent to 32,800 won ($31) on the Korea Exchange.

Korea will raise electricity prices by an average 4 percent starting next week, the second increase in five months, the Ministry of Knowledge Economy said Wednesday. The country’s power consumption surged to a record on Jan. 3 and reduced the country’s capacity reserve buffer below the safety threshold.

“The tariff increase will accelerate the company’s earnings turnaround,” Kim Dae-sung, an analyst at Hyundai Securities, said in a report. The company may post 5.1 trillion won in operating profit in 2013, compared with an estimated loss last year, said Kim, who raised his share-price estimate by 18 percent to 39,000 won.

Kepco had posted losses as government controls on prices to curb inflation prevented it from passing on higher costs to users. Credit Suisse Group AG raised its stock rating to outperform, the equivalent of buy, while Korea Investment & Securities, Samsung Securities, and LIG Investment & Securities increased their share-price estimates.

Kepco CEO Cho Hwan-eik said in his New Year’s Day speech to employees that the utility should increase electricity prices to forestall a power crisis. Cho was appointed on Dec. 17 after a struggle between the government and his predecessor Kim Joong-kyum over raising prices led to his resignation in November, before the end of his term. Bloomberg