Is Korea Electric Power Corp (KEP) Overvalued After 3.5% Rally?

KEPCO President Kim Dong-cheol stated that KEPCO will cover 20% of the 1.4 trillion won cost for the first phase of the Honam semiconductor cluster's power grid, with Samsung and SK Hynix covering the remaining 80%. The cost-sharing is based on electricity usage ratios, as no government support is expected. KEPCO aims to reduce its bond-to-equity ratio to 2 times by 2027.

Korea and the U.S. agreed to a $120B nuclear framework, including building eight plants. Two will use Korea's APR1400 design, six will use the U.S. AP1000. Korean firms will join construction, and the Korean government seeks 5%–10% equity in Westinghouse. The project requires commercial rationality review.

Samsung Electronics and SK Hynix rejected KEPCO's proposal for 25 trillion won ($18.7 billion) in upfront funding to secure electricity for semiconductor plants, citing concerns over demand and financial commitment. KEPCO seeks funds for power infrastructure. Both companies declined to comment. The dispute highlights infrastructure challenges in South Korea's semiconductor expansion plans.

KEPCO is negotiating 25 trillion won in advance payments from Samsung Electronics (20 trillion) and SK Hynix (5 trillion) to fund grid infrastructure for semiconductor and AI projects. The utility aims to reduce debt reliance and manage liquidity, offering interest rates higher than government bond yields. Negotiations are ongoing, with no final agreements yet.

Korea Electric Power Corp (KEPCO) proposed that Samsung Electronics pay 20 trillion won ($15 billion) upfront for electricity supply until 2031, and SK Hynix pay 5 trillion won, to support grid expansion. KEPCO confirmed the proposal but noted details are still under discussion. (000660)

Korea Electric Power (KEP/KEPCO) reported 1H 2026 consolidated revenue of KRW 46,317.3 billion (+0.3% YoY) and operating income of KRW 4,912.7 billion. Power sales revenue fell 0.4% on weaker industrial demand, while other revenue rose 16.7% on overseas performance. Fuel costs rose 8.8% and nuclear maintenance constrained capacity factors; SMP rose to 151 in August.