What Happened? Q2 2025 Earnings Breakdown

KEPCO E&C reported Q2 2025 revenue of KRW 102.3 billion, 14% below the estimated KRW 119.2 billion. Operating profit came in at a loss of KRW 4.4 billion, missing expectations of a positive KRW 8.8 billion. Net income also disappointed at KRW 0.3 billion, significantly lower than the KRW 14.6 billion estimate. Following a weak Q1, the continued decline in Q2 raises concerns about the company’s near-term outlook.

Why the Underperformance?

The primary drivers of this underperformance were declining sales in the new energy business segment and increased selling, general, and administrative expenses. Despite a favorable global environment for nuclear power and expectations of increased overseas orders, the short-term earnings slump is likely to negatively impact investor sentiment. The surge in Q1 net income was attributed to a one-off gain from the sale of a property, masking the lack of fundamental improvement.

What’s Next? Investment Strategy Analysis

Market analysts predict downward pressure on KEPCO E&C’s stock price in the short term. However, the long-term potential of the nuclear power segment and the possibility of securing overseas contracts warrant attention. Investors should carefully evaluate upcoming order announcements and the company’s profitability improvement strategies before making investment decisions. A ‘Hold’ recommendation is currently maintained, advising a cautious approach until clear signs of earnings recovery emerge.

Action Plan for Investors

  • Short-term investors: Consider holding or reducing exposure.
  • Long-term investors: Monitor upcoming order announcements and earnings improvement before making decisions.
  • All investors: Continuously review the company’s investor relations materials and public disclosures.