Kepco Engineering & Construction Company, Inc (052690)

[Business Overview] KEPCO E&C (Korea Electric Power Engineering & Construction) is a leading Korean energy engineering company established in 1975, providing engineering, procurement, and construction (EPC) as well as operation and maintenance (O&M) engineering services for nuclear and thermal power plants. It is the only company in Korea with the technological capability to perform both reactor system design and overall nuclear power plant design, contributing to domestic and international power plant construction based on its design technologies for the Korean Standard Nuclear Power Plant OPR1000 and the next-generation nuclear power plant APR1400. Its main business areas consist of nuclear power, reactor design, and new energy businesses. As of Q1 2025, the nuclear power segment (nuclear power and reactor design) accounts for approximately 78.1% of total revenue, representing a core proportion. Furthermore, it is actively participating in new energy business sectors such as renewable energy (including wind and solar power), clean hydrogen and ammonia, energy storage systems (ESS), and the development of digital transformation technologies. Its major client is Korea Hydro & Nuclear Power (KHNP). It is also strengthening its position in overseas markets through the export of the Barakah nuclear power plant in the United Arab Emirates (UAE) and the recent contract win for the overall design of the Czech nuclear power plant. [Core Competitiveness] KEPCO E&C possesses unparalleled technological competitiveness as the world's only company capable of simultaneously performing both reactor system design and overall design for nuclear power plants. The Korean-type nuclear power plant APR1400 has received global recognition for its technological prowess, having obtained U.S. NRC Design Certification (DC) and the latest design certification from the European Utility Requirements (EUR) organization. It also plays a leading role in the development of Small Modular Reactors (SMRs). Furthermore, with over 1,800 professional engineering personnel, it provides customized energy solutions throughout the entire lifecycle of power plants and has secured a stable business foundation as a subsidiary of Korea Electric Power Corporation (KEPCO). [Performance Analysis] KEPCO E&C's annual revenue showed a sharp decline from KRW 505.3 billion in 2022 to KRW 6.3 billion in 2023, KRW 5.6 billion in 2024, and KRW 5.2 billion in 2025. In contrast, operating income increased from KRW 13.9 billion in 2022 to KRW 37.8 billion in 2023, then significantly rose to KRW 70.9 billion in 2024, but decreased to KRW 35.5 billion in 2025. Net income consistently increased from KRW 18.0 billion in 2022 to KRW 85.4 billion in 2025. Notably, operating income and net income were exceptionally high relative to revenue, demonstrating unusually strong profitability with operating profit margins of 600% in 2023, 1,266% in 2024, and 682% in 2025. Recent quarterly results show that in Q1 2026, the company recorded revenue of KRW 1.0 billion and operating income of KRW 14.1 billion, maintaining a high operating profit margin. [Financial Soundness] Examining the company's financial soundness, Return on Equity (ROE) consistently improved from 3.30% in 2022 to 13.66% in 2025, indicating increased efficiency in capital utilization. The debt-to-equity ratio slightly increased from 50.25% in 2022 to 63.96% in 2024 but significantly decreased to 41.69% in 2025, maintaining a stable level. The current ratio improved from 153.77% in 2022 to 214.76% in 2025, indicating very good short-term debt repayment capability. [Outlook] KEPCO E&C has high growth potential in the future, driven by the global trend of nuclear power expansion and the growth of the Small Modular Reactor (SMR) market. The company has successfully entered the European market with the Czech nuclear power plant contract win, and continuous growth is expected through securing subsequent nuclear power plant projects in the UAE and large-scale overseas nuclear power projects in countries such as Saudi Arabia and the United States. Furthermore, it is expected to lead the future energy market and pursue sustainable growth through the development of digital transformation technologies and the expansion of new energy businesses such as green/clean hydrogen.