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Author: Greendoug Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 32  
Subject: Kepco Date: 11/25/1997 10:34 PM
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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 its
double-'A'-minus rating to Korea Electric Power Corp.'s US$1 billion Euro
medium-term note program.
Standard & Poor's also assigned its preliminary double-'A'-minus rating
to the company's US$800 million shelf registration of debt securities filed in
the U.S.
At the same time, Standard & Poor's assigned its double-'A'-minus rating
to Korea Electric's US$150 million 7% notes due Oct. 1, 2002, which were drawn
down 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, and
distribution of electricity in South Korea, and faces less pressure from
self-generation and gas suppliers compared with other large electric utilities
around the world. Korea's reliance on electricity for economic growth and the
lack of indigenous fuel sources makes the industry vitally important in Korea.
Korea Electric is majority owned by the government and operates under
regulations that emphasize stability. The company's diverse generating
capacity allows it to maintain stable operating costs. Owing to strong growth
in electricity demand, Korea Electric has accelerated its long-term capital
expenditure program to develop additional capacity, with a five-year capital
spending plan to 2000 totaling about 40 trillion Korean won (about US$52
billion).
Korea Electric experienced a decline in profitability in 1996 along with
increased fuel costs and a higher interest burden. Still, the company's cash
flow generation remains adequate. Despite continued large-scale capital
spending in the future, Korea Electric is expected to maintain its current
financial 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's
strong financial profile despite heavy investment requirements, Standard &
Poor's said. -- CreditWire

SOURCE 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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