KEP

We rate KOREA ELECTRIC POWER CORP (KEP) as a Buy with a composite score of 65.3/100 at a current price of $22.27. The stock scores above average across the majority of our six quantitative factors and ranks #278 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (92th percentile) and value (81th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a No Moat rating (10/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

KOREA ELECTRIC POWER CORP holds a lower-quartile position (#47 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 65.3/100 places it at rank #278 in our full 7,333-stock universe. At $4.4B in market capitalization, KOREA ELECTRIC POWER CORP is a mid-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 2% and favorable momentum (92th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 7% (-48.0pp vs sector) narrow to operating margins of 4% (-13.6pp vs sector) and net margins of 12.0%, yielding a gross-to-net conversion rate of 168%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $22.27, KOREA ELECTRIC POWER CORP appears undervalued relative to its fundamentals. Our value factor score of 81/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at EV/EBITDA of 1.9x (discounted to peers), P/B of 1.1x, P/S of 0.1x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to KOREA ELECTRIC POWER CORP. The stock presents a balanced risk profile: significant leverage (333% debt-to-equity) and low beta of 0.36 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (333% debt-to-equity); low beta of 0.36 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 53th percentile and quality factor at the 45th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our medium uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate KOREA ELECTRIC POWER CORP's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 116.6%, and the balance sheet is managed within acceptable parameters (D/E: 333%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; KOREA ELECTRIC POWER CORP falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, KOREA ELECTRIC POWER CORP receives a Buy rating with a composite score of 65.3/100 (rank #278 of 7,333). Our quantitative framework assigns a No Moat (10/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 70/100.

Our analysis supports a constructive view on KOREA ELECTRIC POWER CORP. The combination of the current valuation, medium uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.