Korea Electric Power Corp (KEP) 2023 Q4 法說會逐字稿

Good morning, and good evening. First of all, thank you all for joining this conference call. And now we'll begin the conference of the fiscal year 2023 4th quarter earning results by KEPCO. This conference will start with a presentation, followed by a divisional Q&A session. (Operator Instructions)

早安，晚上好。首先，感謝大家參加本次電話會議。現在我們將開始召開韓國電力公司 2023 財年第四季獲利結果會議。本次會議將以演講開始，然後是部門問答環節。（操作員說明）

Now we shall commence the presentation on the fiscal year 2023 fourth quarter earnings results by KEPCO.

現在我們開始介紹韓國電力2023財年第四季的獲利結果。

Good afternoon. This is Siyung Yang, General Manager of the Finance and IR team of KEPCO. I'd like to thank you all for participating in today's conference call for the business results for the full year 2023 despite your busy schedules. Today's call will be conducted in both Korean and English. We will begin with a brief presentation on the earnings results, which will be followed by a Q&A session.

午安.我是韓國電力財務和投資者關係團隊總經理 Siyung Yang。感謝大家在百忙之中參加今天的 2023 年全年業績電話會議。今天的電話會議將以韓語和英語進行。我們將先簡要介紹獲利結果，然後再進行問答環節。

Please note that the financial information to be disclosed today are preliminary consolidated IFRS figures and all comparisons are on a year-over-year basis. Also business plans, targets, financial estimates and other forward-looking statements are based on our current targets and forecasts. Therefore, please be noted that such information may involve investment risks and uncertainties.

請注意，今天揭露的財務資訊是初步綜合國際財務報告準則數據，所有比較都是按年比較。此外，業務計劃、目標、財務估計和其他前瞻性陳述均基於我們目前的目標和預測。因此，請您注意該等資訊可能涉及投資風險和不確定性。

Now we will begin with an overview of the earnings results for the year-end 2023 in Korean, which will then be repeated in English.

現在，我們先用韓語概述 2023 年底的獲利結果，然後再用英文重複。

Now we will provide the business performance overview in English. Good afternoon. I am Wonkee Cho, Senior IR Manager. The company recorded an operating loss of KRW 4,569.1 billion in 2023. In Q4, however, the company recorded a positive net income of KRW 1.9 trillion, boosting positive for consecutive quarters since KRW 2 trillion net income in Q3. Revenue increased by 23.8% to KRW 88,205.1 billion. Power sales revenue rose by 25.3% to KRW 82,954.8 billion. Overseas business and other revenue rose by 3.8% to KRW 5,250.3 billion.

現在我們將以英文提供業務績效概述。午安.我是 Wonkee Cho，高級 IR 經理。該公司2023年營業虧損為45,691億韓元。然而，第四季度，該公司淨利潤為正值1.9兆韓元，繼第三季淨收入2兆韓元之後，連續幾季實現正值成長。營收成長23.8%至882,051億韓元。售電收入成長25.3%至829,548億韓元。海外業務及其他收入成長3.8%至52,503億韓元。

Cost of goods sold and SG&A decreased by 10.7% to KRW 92,774.2 billion. Fuel costs and purchase power costs by 22.2% and 8.8% Y-o-Y, respectively, to KRW 26,978.3 billion and KRW 38,304.3 billion, respectively. Depreciation expense rose by 5.1% to KRW 11,314.3 billion due to an increase of the depreciable assets such as new power plants, namely Shin-Hanul Unit 1.

銷售成本和 SG&A 下降 10.7%，至 927,742 億韓元。燃料成本和購電成本分別年增22.2%和8.8%，達到269,783億韓元和383,043億韓元。由於新電廠（即新韓一號機組）等應折舊資產的增加，折舊費用增加了 5.1%，達到 113,143 億韓元。

Next, I will go over the changes in the nonoperating performance. Total debt stood at KRW 133,631.8 billion, which is a 10.8% increase Y-o-Y as of year-end 2023 due to higher power purchase costs. Financial profit recorded a loss of KRW 3,922.4 billion, which is a KRW 1 trillion increase Y-o-Y. As a result of the foregoing, for the full year 2023, the company posted a consolidated net loss of KRW 4.656.9 billion.

接下來我再介紹一下營業外績效的變化。由於購電成本上升，截至 2023 年底，債務總額為 1,336,318 億韓元，年增 10.8%。財務利潤虧損39,224億韓元，年增1兆韓元。受此影響，2023年全年，公司合併淨虧損為46.569億韓元。

Next, I'd like to go over the main points of interest, starting with power sales performance and outlook. In 2023, power sales volume decreased by 0.4% Y-o-Y to 546 terawatt hours, mainly due to a slowdown of the manufacturing sector, which resulted in a decline of industrial power sales. In 2024, sales volume should slightly increase as the exports start to pick up.

接下來，我想從售電業績和前景開始談大家關心的主要問題。2023年，售電量年減0.4%至546太瓦時，主要是由於製造業放緩導致工業售電量下降。2024年，隨著出口開始回升，銷售量應會略有增加。

Next, I'd like to go over the unit price of the major fuel sources. The unit fuel cost by fuel source in 2023 was KRW 230,000 per tonne for coal, KRW 1.36 million per tonne per LNG and KRW 1,191 per liter for oil as international fuel prices stabilized. For the year 2025 -- 2024, excluding offloading costs, coal is expected to be between KRW 200,000 to KRW 300,000 per tonne, KRW 1.1 million per tonne for LNG and around KRW 1,200 per liter for oil. Please note that forecast may change subject to international fuel price trends.

接下來我想介紹主要燃料來源的單價。隨著國際燃料價格穩定，2023 年按燃料來源劃分的單位燃料成本為每噸煤炭 23 萬韓元、每噸液化天然氣 136 萬韓元、每公升石油 1,191 韓元。2025-2024年，不包括卸貨成本，煤炭預計將在每噸20萬至30萬韓元之間，液化天然氣每噸110萬韓元，石油每公升約1,200韓元。請注意，預測可能會根據國際燃油價格趨勢而變化。

Looking at the generation mix of group subsidiaries. Nuclear power plant utilization was similar to the previous year. However, installed capacity increased because of the addition of new power plant, Shin-Hanul Unit 1, December 2022 and the completion of maintenance of Hanbit Unit 4, which resulted in an increase of the contribution of nuclear power to the generation mix on a Y-o-Y basis. In case of coal, utilization decreased due to an increase of maintenance days, resulting in a lower contribution to the generation mix. The contribution of LNG also declined, mainly driven by a reduction of power demand and an increase of base generation.

看看集團子公司的世代結構。核電廠利用率與上年相似。然而，由於2022年12月新電廠Shin-Hanul 1號機組的新增以及Hanbit 4號機組維護完成，裝置容量有所增加，導致核電對發電結構的貢獻同比增加基礎。就煤炭而言，由於維護天數增加，利用率下降，導致對發電結構的貢獻降低。液化天然氣的貢獻也有所下降，主要是因為電力需求減少和基礎發電量增加所致。

In 2024, the contribution of nuclear power plant should increase as utilization is expected to rise as new power plants, mainly Shin-Hanul Unit 2 is expected to come online in the first half and [Shin-Hanul] Unit 3 is scheduled for the second half. Contribution of coal and LNG should slightly decline. For 2024 utilization by power source, it is projected to be low to mid-80% for nuclear power, mid-50% for coal and mid to high-20% for LNG.

2024年，核電廠的貢獻應會增加，因為新電廠的利用率預計將上升，主要是新韓核電廠2號機組預計將在上半年上線，[新韓核]3號機組計劃在下半年上線一半。煤炭和液化天然氣的貢獻應略為下降。就2024年的能源利用率而言，核電預計為低至中80%，煤炭為中50%，液化天然氣為中至高20%。

Regarding RPS and ETS costs. As of 2023, RPS cost was KRW 2,779.2 billion on a consolidated basis and KRW 3,136.8 billion on stand-alone. ETS cost was KRW 87.8 billion on a consolidated basis and KRW 76.9 billion stand-alone basis.

關於 RPS 和 ETS 成本。截至2023年，RPS合併成本為27,792億韓元，單獨成本為31,368億韓元。ETS 綜合成本為 878 億韓元，單獨成本為 769 億韓元。

Now let us move on to Q&A session. Since we will be proceeding the Q&A session in both Korean and English, I'd like to ask that you make your questions brief and clear. Thank you.

現在讓我們進入問答環節。由於我們將以韓語和英語進行問答環節，因此我想請您的問題簡短而明確。謝謝。

(Operator Instructions) The first question will be given by Moon Kyeong Won from Meritz Securities.

（操作員說明） 第一個問題將由 Meritz 證券公司的 Moon Kung Won 提出。

Good afternoon. I have three questions. First is regarding the stand-alone performance. I see that net income for Q4 on stand-alone basis were quite strong and probably are exceeding some of the expectations. I think there has been a one-off financial profit that drove the positive income trend in Q4. So could you please elaborate on this?

午安.我有三個問題。首先是關於單機性能。我發現第四季的獨立淨利潤相當強勁，可能超出了一些預期。我認為一次性的財務利潤推動了第四季的正向收入趨勢。那您能詳細說明一下嗎？

Second, as of year-end 2023, it seems that the retained earnings have been transferred to a separate KEPCO entity. So in 2024, can we expect that these resources will be used for dividend payments?

其次，截至 2023 年底，留存收益似乎已轉移至單獨的韓國電力實體。那麼到2024年，我們是否可以預期這些資源將用於支付股利？

Third, I think there is quite strong interest regarding the shareholder return policies of public corporations in recent times. So have you had any changes in the dividend policy? Do you plan to communicate that to the market? And if so, when will this be communicated to the market?

第三，我認為最近人們對上市公司的股東回報政策非常感興趣。那麼股利政策有什麼改變嗎？您打算向市場傳達這一點嗎？如果是這樣，什麼時候會向市場傳達？

So regarding your first question, in Q4 2023 in those numbers, the interim dividend payments upstreamed by the subsidiaries have been booked, which is around KRW 3.2 trillion. And so this is part of the dividend profits under financial profits and losses. And so this generated quite strong net income on standalone basis for KEPCO.

那麼關於你的第一個問題，在2023年第四季的這些數字中，子公司上游的中期股利支付已經入賬，約為3.2兆韓元。因此，這是財務損益下股利利潤的一部分。因此，這為韓國電力公司帶來了相當強勁的獨立淨利潤。

So let me address question two and question three at the same time. So according to the KEPCO Act that clearly defines the resources that we can use for dividend payments. And while the -- we are still waiting for the final numbers of 2023, if we are able to generate a positive income, we will be in line with the government's overall dividend policies for the government-related and public corporations of Korea. And with those -- keeping in mind those dividend policies of the government and considering the overall financial performance. And if we are able to generate positive business performance, I think we will be able to make more clear communication with the market regarding our dividend.

那麼讓我同時回答第二個問題和第三個問題。因此，根據韓國電力法案，明確規定了我們可以用於支付股息的資源。雖然我們仍在等待 2023 年的最終數字，但如果我們能夠產生正收入，我們將符合政府對韓國政府相關和公共企業的整體股息政策。並牢記政府的股息政策並考慮整體財務表現。如果我們能夠產生積極的業務績效，我認為我們將能夠就我們的股息與市場進行更清晰的溝通。

As for your last question, I think that in 2024 the government will be reflecting shareholder return policy and performance of the public corporations and the KPI overall business management evaluations, especially for the listed public operations. And so this has not been finalized yet. And if that is -- the final version is distributed, we will be reviewing that and we will be developing more clear internal dividend policy. And then we will be able to make announcement and communicate that with the market.

至於你的最後一個問題，我認為到2024年，政府將反映上市公司的股東回報政策和業績以及KPI整體業務管理評估，特別是上市公司的運作。所以這還沒有最終確定。如果最終版本發布，我們將對其進行審查，並且我們將制定更明確的內部股利政策。然後我們將能夠發佈公告並與市場進行溝通。

(Operator Instructions) The following question is Ryu Jae-Hyun from Mirae Asset Securities.

（操作員說明） 以下問題是來自 Mirae Asset Securities 的 Ryu Jae-Hyun。

I would like to have a better idea of the outlook that you have for the unit price of LNG and coal on a quarterly basis. And I understand that you have not disclosed the unit price for the purchase power cost. However, it would be helpful if you can share the trend especially on a quarterly basis for us to better understand.

我想更了解你們對季度液化天然氣和煤炭單價的展望。據我了解，您還沒有透露購電成本的單價。但是，如果您能分享趨勢，尤其是季度趨勢，以便我們更好地理解，將會很有幫助。

Lastly, you mentioned that there was a dividend payment by subsidiaries upstreamed to KEPCO and it was quite large in size. However, I am not so sure if the subsidiaries were generating very strong profit streams to be able to upstream such large amount. So in that respect, can you talk about whether the dividend payment by subsidiaries was generated by strong profits of the subsidiaries? Or were there some other reasons for those subsidiaries to upstream the dividend?

最後，您提到韓國電力上游子公司有分紅，而且規模相當大。然而，我不太確定子公司是否產生了非常強勁的利潤流，能夠向上游輸送如此大的金額。那麼從這方面來說，您能否談談子公司的股息支付是否是由子公司的強勁利潤產生的？還是有其他原因促使這些子公司上調股利？

So regarding your first question on the quarterly outlook of the price of LNG and coal, we usually disclose annual outlook, not quarterly outlook. So I ask for your understanding.

因此，關於你的第一個問題，即液化天然氣和煤炭價格的季度展望，我們通常會揭露年度展望，而不是季度展望。所以我請求你的理解。

And regarding your second question on disclosing the unit price of the purchase power cost. So on our website, we have a section on KEPCO's statistics and the monthly actual figures are disclosed. However, in terms of our forecast and outlook, it can change quite quickly. So unfortunately, we are not able to disclose the outlook for this item.

關於第二個問題，關於公開購電成本單價的問題。所以在我們的網站上，我們有一個關於韓國電力統計數據的部分，並揭露了每月的實際數據。然而，就我們的預測和前景而言，情況可能很快就會改變。不幸的是，我們無法透露該項目的前景。

Yes. So regarding your third question, I don't think I can speak on behalf of the subsidiaries for their dividend upstream. But on a stand-alone basis, according to the KEPCO Act, there is a ceiling on the amount of bonds that KEPCO can issue. And to be legally satisfying these requirements, the decision to pay the -- to receive interim dividends from the subsidiaries has been made.

是的。所以關於你的第三個問題，我認為我不能代表子公司對上游的股利發言。但就單獨而言，根據韓國電力公司法，韓國電力公司可以發行的債券數量有上限。為了合法地滿足這些要求，我們決定支付——以從子公司收取中期股息。

The following question is by Kang Dong Jin from Hyundai Motor Securities.

以下問題由現代汽車證券的 Kang Dong Jin 提出。

My name is Kang Dong Jin, and I have two questions. First of all, you mentioned the outlook of the unit price of fuel. I was wondering, in your outlook did you incorporate private consumption tax issue? So it has been extended for 6 months. But once that expires it will go back up. So I was wondering if you have considered that change in your outlook.

我叫姜東進，我有兩個問題。首先，您提到了燃油單價的前景。我想知道，您的展望中是否納入了私人消費稅議題？所以延長了6個月。但一旦到期，它就會回升。所以我想知道你是否考慮過你的觀點發生了這種變化。

Second, regarding shareholder return and financial structure, whether it's on a stand-alone or a consolidated basis, I would like to know if you have any financial targets adjusted to equity. And how is your dividend policy related to those targets? For example, if debt equity goes to this level, will you be then paying dividends to the shareholders and so on?

第二，關於股東回報和財務結構，無論是單獨的還是合併的，我想知道你們是否有根據股權調整的財務目標。您的股利政策與這些目標有何關係？例如，如果負債股本達到這個水平，你會向股東支付股利等嗎？

So regarding your first question regarding the tax. Also, it has been extended and currently -- the current system has been reflected into the outlook. And then regarding the dividend policy requirements that you mentioned, we do not have a detailed dividend policy yet. So once that has been confirmed, we will be able to communicate that to the market.

關於您關於稅收的第一個問題。此外，它已被延長，目前當前的系統已反映在展望中。然後關於你提到的股利政策要求，我們還沒有詳細的股利政策。因此，一旦得到確認，我們將能夠向市場傳達這一點。

The following question is by Hwang Sung Hyun from Eugene Investment Securities.

以下問題由尤金投資證券公司的 Hwang Sung Hyun 提出。

So I have two questions. My name is Hwang Sung Hyun from Eugene Securities. The LNG price in the spot market has been quite weak recent times, so have been the U.S. natural gas prices. And I know that KEPCO's pricing of these type of fuel is related to the oil price. So in this respect, can we expect cost levels of fuel to come further down compared to the outlook that you have mentioned in your presentation?

所以我有兩個問題。我是尤金證券公司的黃成賢。近期液化天然氣現貨市場價格相當疲軟，美國天然氣價格也是如此。我知道韓國電力對此類燃料的定價與油價有關。那麼在這方面，與您在演講中提到的前景相比，我們是否可以預期燃料成本水準會進一步下降？

And then second question is regarding the fuel as well. So I think in Q3, for the nuclear power, you have mentioned -- I feel that unit price has been somewhat on declining trend. So I would like to ask for your opinion on that. And also, given the inventory level that you have currently, do you think you will be able to exhaust it? Or what do you think the trend will be for this year?

第二個問題也是關於燃料。所以我認為在第三季度，對於核電，你提到過——我覺得單價一直在下降。所以我想問你對此的看法。另外，考慮到您目前的庫存水平，您認為您能夠用完嗎？還是你認為今年的趨勢是什麼？

Regarding your first question on LNG price, so like you've mentioned, we also read that spot prices have been quite weak in recent times. It takes about 5 to 6 months on average for the spot prices to have impact on our purchase price. And while spot price is of course important benchmark, we usually procure from KOGAS. And the KOGAS' mid- to long-term volume secure policy is also important, and it can also have an impact on our pricing as well.

關於你關於液化天然氣價格的第一個問題，正如你所提到的，我們也了解到，近期現貨價格相當疲軟。現貨價格平均需要5到6個月的時間才能對我們的採購價格產生影響。雖然現貨價格當然是重要的基準，但我們通常會從 KOGAS 購買。而KOGAS的中長期銷售保障政策也很重要，它也會對我們的定價產生影響。

Regarding your second question on the nuclear fuel. So KHNP usually has long-term contracts when they purchase the uranium, around 5- to 10-year contracts. In those contracts, KHNP is usually able to determine and control the volume of purchase during that contract period. So they try to have more -- so they are able to respond to changing market price trends of the nuclear fuel in the market, and they use that power to maintain an appropriate level of cost of nuclear fuel. And as for the inventory, it's around 3 years at the moment.

關於你提到的第二個問題，核燃料問題。因此，KHNP 在購買鈾時通常簽訂長期合同，大約 5 至 10 年的合約。在這些合約中，KHNP 通常能夠確定和控制合約期間內的採購量。因此，他們試圖擁有更多——這樣他們就能夠應對市場上不斷變化的核燃料價格趨勢，並利用這種力量來維持適當的核燃料成本水準。至於庫存，目前約為3年。

The following question is by Moon Kyeong Won from Meritz Securities.

以下問題由 Meritz 證券公司的 Moon Kyeong Won 提出。

I'm Moon Kyeong Won from Meritz Securities. And I have one more question regarding the adjustment factor. So in 2022 and 2023, the numbers have come down significantly. I am wondering about direction of the adjustment factor for 2024. Do you think it will be similar to 2023? Or do you think that given the loss and the financial status of KEPCO at the moment, what do you think the adjustment factor will be or at least the direction of it in 2024?

我是梅里茨證券公司的文景元。我還有一個關於調整因素的問題。所以在2022年和2023年，這個數字大幅下降。我想知道2024年調整係數的方向。您認為這會與2023年類似嗎？或者您認為，考慮到韓國電力目前的虧損和財務狀況，您認為2024年的調整因素是什麼，或至少是方向是什麼？

So to answer your question, first, if you look at the adjustment factor, although factor does not mean that the subsidiaries are taking a lower amount, the opposite is the same as well. The high factor does not mean that the subsidiaries are taking a higher portion. So usually, we take -- deduct the fuel cost from the SMP, that would be the margin. And then the factor will be calculated in a retrospective way.

所以回答你的問題，首先，如果你看一下調整係數，雖然係數並不代表子公司的金額減少，但反之亦然。高係數並不代表子公司所佔份額較高。所以通常，我們會從 SMP 中扣除燃料成本，這就是利潤。然後以追溯的方式計算該係數。

So it's -- we try to -- it's a retrospective number rather than a number that we set from the very beginning. And so I think rather than the factor itself, the profits that the subsidiaries can take on top of their cost can be more important. And in this sense, the actual number of the factor is quite -- can be quite insignificant and it's also very difficult to make an outlook on that. And as to the subsidiaries' profits, at this stage it's difficult to foresee as well. So unfortunately, I'm not able to give you a more clear answer on this question.

所以這是——我們試圖——這是一個回顧性的數字，而不是我們從一開始就設定的數字。因此，我認為，子公司在成本之外所能獲得的利潤比因素本身更重要。從這個意義上說，該因素的實際數量可能相當微不足道，而且很難對此進行展望。而對於子公司的利潤，現階段也很難預測。很遺憾，我無法就這個問題給你更明確的答案。

Currently there are no participants with questions. (Operator Instructions) The following question is by Hwang Sung Hyun from Eugene Investment Securities.

目前沒有參與者有疑問。（操作員說明） 以下問題由尤金投資證券公司的 Hwang Sung Hyun 提出。

So in other items, compared to Q4 2022, there seems to be a decline. So what would be the main reason for this?

所以在其他項目上，與 2022 年第四季相比，似乎有所下降。那麼造成這種情況的主要原因是什麼呢？

Yes. So in the previous year, we sold the former headquarter building that was booked under other items. But we do not have any similar transaction this year. So I think this will be the main reason.

是的。所以在前一年，我們把在其他項目下預訂的前總部大樓賣掉了。但今年我們沒有類似的交易。所以我認為這將是主要原因。

Currently, there are no participant questions. (Operator Instructions) The following question is by Kang Dong Jin from Hyundai Motor Securities.

目前，沒有參與者提問。（操作員說明） 以下問題由現代汽車證券公司的 Kang Dong Jin 提出。

I'm looking forward to hear your CapEx numbers, CapEx guidance for 2024 and 2025. I understand that most of the new power plants that were under construction are coming online soon. So what would be the CapEx figures for '24 and '25?

我期待聽到您的資本支出數字以及 2024 年和 2025 年的資本支出指南。據我了解，大多數正在建造的新發電廠即將上線。那麼 24 年和 25 年的資本支出數字是多少呢？

For our 2024 annual number on a consolidated basis, CapEx is expected to be around KRW 17.6 trillion, and then 2025, KRW 19.9 trillion. These are CapEx numbers for the domestic market. 2024 transmission and distribution should be around KRW 8.2 trillion; nuclear power plant, KRW 4.2 trillion; thermal power, KRW 3.7 trillion. And the remaining will be mostly renewable energy and others.

對於我們 2024 年的綜合數據，資本支出預計約為 17.6 兆韓元，2025 年為 19.9 兆韓元。這些是國內市場的資本支出數字。 2024年輸配電費用約8.2兆韓元；核電廠，4.2兆韓元；火電，3.7兆韓元。其餘的將主要是再生能源和其他能源。

Currently, there are no participants questions. (Operator Instructions) As there are no further questions, we'll now end the Q&A session. This concludes the Fiscal Year 2003 Fourth Quarter Earning Results by KEPCO. Thank you for your participation.

目前，沒有參與者提問。（操作員說明）由於沒有其他問題，我們現在將結束問答環節。韓國電力公司 2003 財年第四季獲利結果到此結束。感謝您的參與。

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

[本筆錄中的英語陳述是由現場通話中的口譯員說出的。