KEPCO KPS Concludes Extension Agreement for Power Plant Project in Uruguay

KEPCO KPS, a South Korean co

mpany, has signed an extension contract with the Uruguayan Electricity Authority (UTE) for the Punta del Tigre Combined Cycle Power Plant Operation and Maintenance Project. The agreement, which is expected to generate over 50 billion won in sales over two years, extends the contract period until 2025. KEPCO KPS has been involved in the power plant project since 2012 and has seen significant overseas business in Uruguay. With the contract extension, the company secures an expected revenue of approximately 37.5 billion won for the next two years, with the potential for further revenue in the future.

On the other hand, NH Investment & Securities has changed its valuation method for POSCO Future M and raised its target price to W560,000. However, the rating has been downgraded to Hold due to limited upside potential. The change in valuation method reflects the increase in mid/long-term supply contracts, which has led to an uptick in capacity and earnings forecasts for the company. The new valuation method, a discounted cash flow (DCF) approach, aims to more accurately reflect changes in the business environment. NH Investment & Securities arrives at a fair market cap of W44tn and a target price of W560,000, representing a premium to competitors in the battery industry.

In terms of performance, POSCO Future M posted sales of W1.19tn in the second quarter of 2023, with an operating profit of W52.1bn. While the basic materials business showed progress as expected, the growth of the energy materials business, particularly cathode and anode sales, was slower than predicted. Cathode sales increased due to improved product mix and pricing, but shipments declined due to sluggish European demand. Anode sales also faced weak demand in Europe. The company plans to defend its utilization rate through the signing of new long-term contracts.