Hi.This is my first posting at TMF. I'm a little interested in KEPCO after looking at its chart, a nasty jagged line headed southeast in a hurry, from 18 in August to 8 in mid-November. But, since Kepco's a government owned and supported utility and the Koreans will continue to use power, it might be worth buying as a flyer at a p/e of 7.7. Just as trees don't grow to the sky, so also government owned utilities (in this case, Kepco is the only game in the entire country and that situation is unlikely to change) don't shrink to the ground. $8 or so might just be the low point in this stock. Then again, it might go lower.I'd be interested in others' opinions before I get my feet wet. I couldn't find any good research on it (in DLJ) and their annual report, I understand, is not available (and probably unenlightening in any event). Buying Kepco would definitely be a case of buying a stock that might have been overbeaten up in the Korean currency/equity crisis.For general information, here is part of a report on S&P's rating on Kepco's bonds in early October:NEW YORK, Oct. 2 /PRNewswire/ -- Standard & Poor's today assigned itsdouble-'A'-minus rating to Korea Electric Power Corp.'s US$1 billion Euromedium-term note program. Standard & Poor's also assigned its preliminary double-'A'-minus ratingto the company's US$800 million shelf registration of debt securities filed inthe U.S. At the same time, Standard & Poor's assigned its double-'A'-minus ratingto Korea Electric's US$150 million 7% notes due Oct. 1, 2002, which were drawndown from the shelf registration. The rating outlook is negative. Ratings reflect: -- The close ties between the utility and the Republic of Korea (rated double-'A'-minus/Negative/`A-1'-plus), -- Korea Electric's strategic role in the national economy, -- A favorable regulatory regime, and -- The company's strong operational and financial profiles. Korea Electric has a monopoly on the generation, transmission, anddistribution of electricity in South Korea, and faces less pressure fromself-generation and gas suppliers compared with other large electric utilitiesaround the world. Korea's reliance on electricity for economic growth and thelack of indigenous fuel sources makes the industry vitally important in Korea.Korea Electric is majority owned by the government and operates underregulations that emphasize stability. The company's diverse generatingcapacity allows it to maintain stable operating costs. Owing to strong growthin electricity demand, Korea Electric has accelerated its long-term capitalexpenditure program to develop additional capacity, with a five-year capitalspending plan to 2000 totaling about 40 trillion Korean won (about US$52billion). Korea Electric experienced a decline in profitability in 1996 along withincreased fuel costs and a higher interest burden. Still, the company's cashflow generation remains adequate. Despite continued large-scale capitalspending in the future, Korea Electric is expected to maintain its currentfinancial profile, with total debt to capital in the 40% area.OUTLOOK: NEGATIVE Korea Electric's rating outlook reflects that of the Republic of Korea.Ongoing favorable regulatory treatment is expected to support Korea Electric'sstrong financial profile despite heavy investment requirements, Standard &Poor's said. -- CreditWireSOURCE Standard & Poor's CreditWire -0- 10/02/97 /CONTACT: Daisuke Fukutomi of S&P Tokyo, 81-3-3593-8714, or Robert E.Richards of S&P Melbourne, 61-3-9250-4570/ /Web site: http://www.ratings.standardpoor.com/ (KEP)
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