Intrinsic value of Korea Electric Power Corporation - KEP

Previous Close

$13.76

  Intrinsic Value

$12.88

stock screener

  Rating & Target

hold

-6%

Previous close

$13.76

 
Intrinsic value

$12.88

 
Up/down potential

-6%

 
Rating

hold

We calculate the intrinsic value of KEP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 17.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.40
  11.66
  10.99
  10.39
  9.86
  9.37
  8.93
  8.54
  8.19
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
Revenue, $m
  62,570
  69,865
  77,546
  85,607
  94,044
  102,855
  112,043
  121,611
  131,565
  141,915
  152,673
  163,852
  175,469
  187,543
  200,095
  213,148
  226,728
  240,863
  255,581
  270,915
  286,898
  303,566
  320,957
  339,109
  358,066
  377,872
  398,572
  420,216
  442,854
  466,540
Variable operating expenses, $m
  50,355
  56,213
  62,381
  68,854
  75,628
  82,704
  90,082
  97,764
  105,758
  114,069
  122,595
  131,572
  140,901
  150,596
  160,675
  171,157
  182,062
  193,412
  205,230
  217,543
  230,378
  243,762
  257,727
  272,303
  287,526
  303,429
  320,052
  337,431
  355,610
  374,630
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  50,355
  56,213
  62,381
  68,854
  75,628
  82,704
  90,082
  97,764
  105,758
  114,069
  122,595
  131,572
  140,901
  150,596
  160,675
  171,157
  182,062
  193,412
  205,230
  217,543
  230,378
  243,762
  257,727
  272,303
  287,526
  303,429
  320,052
  337,431
  355,610
  374,630
Operating income, $m
  12,215
  13,652
  15,165
  16,753
  18,415
  20,151
  21,961
  23,846
  25,807
  27,846
  30,077
  32,280
  34,568
  36,947
  39,420
  41,991
  44,667
  47,451
  50,351
  53,372
  56,520
  59,804
  63,230
  66,806
  70,541
  74,443
  78,521
  82,785
  87,244
  91,911
EBITDA, $m
  22,624
  25,262
  28,040
  30,954
  34,005
  37,191
  40,513
  43,973
  47,572
  51,315
  55,205
  59,247
  63,447
  67,813
  72,352
  77,072
  81,982
  87,093
  92,415
  97,960
  103,739
  109,766
  116,054
  122,618
  129,473
  136,634
  144,119
  151,945
  160,131
  168,695
Interest expense (income), $m
  1,762
  3,487
  4,190
  4,922
  5,693
  6,502
  7,349
  8,234
  9,156
  10,116
  11,115
  12,154
  13,234
  14,356
  15,523
  16,735
  17,995
  19,305
  20,668
  22,087
  23,564
  25,103
  26,708
  28,381
  30,127
  31,949
  33,852
  35,840
  37,918
  40,090
  42,363
Earnings before tax, $m
  8,728
  9,462
  10,243
  11,060
  11,913
  12,802
  13,728
  14,690
  15,691
  16,731
  17,923
  19,045
  20,212
  21,424
  22,685
  23,997
  25,362
  26,783
  28,264
  29,807
  31,417
  33,096
  34,849
  36,679
  38,592
  40,591
  42,681
  44,867
  47,154
  49,548
Tax expense, $m
  2,357
  2,555
  2,766
  2,986
  3,217
  3,457
  3,707
  3,966
  4,237
  4,517
  4,839
  5,142
  5,457
  5,785
  6,125
  6,479
  6,848
  7,231
  7,631
  8,048
  8,483
  8,936
  9,409
  9,903
  10,420
  10,960
  11,524
  12,114
  12,732
  13,378
Net income, $m
  6,371
  6,908
  7,478
  8,074
  8,697
  9,346
  10,021
  10,724
  11,454
  12,214
  13,084
  13,903
  14,755
  15,640
  16,560
  17,518
  18,514
  19,552
  20,633
  21,759
  22,934
  24,160
  25,440
  26,776
  28,172
  29,631
  31,157
  32,753
  34,422
  36,170

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  191,932
  214,311
  237,872
  262,598
  288,477
  315,507
  343,690
  373,039
  403,574
  435,323
  468,321
  502,612
  538,248
  575,284
  613,787
  653,828
  695,485
  738,843
  783,991
  831,028
  880,056
  931,184
  984,529
  1,040,213
  1,098,363
  1,159,117
  1,222,614
  1,289,006
  1,358,448
  1,431,106
Adjusted assets (=assets-cash), $m
  191,932
  214,311
  237,872
  262,598
  288,477
  315,507
  343,690
  373,039
  403,574
  435,323
  468,321
  502,612
  538,248
  575,284
  613,787
  653,828
  695,485
  738,843
  783,991
  831,028
  880,056
  931,184
  984,529
  1,040,213
  1,098,363
  1,159,117
  1,222,614
  1,289,006
  1,358,448
  1,431,106
Revenue / Adjusted assets
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
  0.326
Average production assets, $m
  148,290
  165,581
  183,785
  202,888
  222,883
  243,767
  265,542
  288,217
  311,809
  336,339
  361,834
  388,328
  415,861
  444,476
  474,224
  505,161
  537,346
  570,845
  605,727
  642,069
  679,949
  719,451
  760,667
  803,689
  848,618
  895,557
  944,616
  995,912
  1,049,564
  1,105,701
Working capital, $m
  5,694
  6,358
  7,057
  7,790
  8,558
  9,360
  10,196
  11,067
  11,972
  12,914
  13,893
  14,911
  15,968
  17,066
  18,209
  19,396
  20,632
  21,919
  23,258
  24,653
  26,108
  27,625
  29,207
  30,859
  32,584
  34,386
  36,270
  38,240
  40,300
  42,455
Total debt, $m
  77,587
  91,149
  105,427
  120,411
  136,094
  152,474
  169,553
  187,338
  205,842
  225,082
  245,079
  265,860
  287,455
  309,899
  333,232
  357,497
  382,741
  409,015
  436,375
  464,879
  494,590
  525,574
  557,901
  591,646
  626,885
  663,701
  702,181
  742,414
  784,496
  828,527
Total liabilities, $m
  116,311
  129,872
  144,151
  159,134
  174,817
  191,197
  208,276
  226,062
  244,566
  263,806
  283,803
  304,583
  326,178
  348,622
  371,955
  396,220
  421,464
  447,739
  475,099
  503,603
  533,314
  564,298
  596,625
  630,369
  665,608
  702,425
  740,904
  781,138
  823,220
  867,250
Total equity, $m
  75,621
  84,438
  93,722
  103,464
  113,660
  124,310
  135,414
  146,977
  159,008
  171,517
  184,518
  198,029
  212,070
  226,662
  241,832
  257,608
  274,021
  291,104
  308,892
  327,425
  346,742
  366,887
  387,904
  409,844
  432,755
  456,692
  481,710
  507,868
  535,229
  563,856
Total liabilities and equity, $m
  191,932
  214,310
  237,873
  262,598
  288,477
  315,507
  343,690
  373,039
  403,574
  435,323
  468,321
  502,612
  538,248
  575,284
  613,787
  653,828
  695,485
  738,843
  783,991
  831,028
  880,056
  931,185
  984,529
  1,040,213
  1,098,363
  1,159,117
  1,222,614
  1,289,006
  1,358,449
  1,431,106
Debt-to-equity ratio
  1.030
  1.080
  1.120
  1.160
  1.200
  1.230
  1.250
  1.270
  1.290
  1.310
  1.330
  1.340
  1.360
  1.370
  1.380
  1.390
  1.400
  1.410
  1.410
  1.420
  1.430
  1.430
  1.440
  1.440
  1.450
  1.450
  1.460
  1.460
  1.470
  1.470
Adjusted equity ratio
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6,371
  6,908
  7,478
  8,074
  8,697
  9,346
  10,021
  10,724
  11,454
  12,214
  13,084
  13,903
  14,755
  15,640
  16,560
  17,518
  18,514
  19,552
  20,633
  21,759
  22,934
  24,160
  25,440
  26,776
  28,172
  29,631
  31,157
  32,753
  34,422
  36,170
Depreciation, amort., depletion, $m
  10,410
  11,610
  12,874
  14,201
  15,590
  17,040
  18,552
  20,127
  21,765
  23,468
  25,127
  26,967
  28,879
  30,866
  32,932
  35,081
  37,316
  39,642
  42,064
  44,588
  47,219
  49,962
  52,824
  55,812
  58,932
  62,191
  65,598
  69,161
  72,886
  76,785
Funds from operations, $m
  16,781
  18,518
  20,352
  22,275
  24,286
  26,386
  28,573
  30,851
  33,220
  35,682
  38,211
  40,870
  43,634
  46,506
  49,492
  52,598
  55,830
  59,194
  62,697
  66,347
  70,153
  74,122
  78,264
  82,588
  87,104
  91,823
  96,755
  101,913
  107,309
  112,955
Change in working capital, $m
  628
  664
  699
  734
  768
  802
  836
  871
  906
  942
  979
  1,017
  1,057
  1,099
  1,142
  1,188
  1,236
  1,286
  1,339
  1,395
  1,454
  1,517
  1,583
  1,652
  1,725
  1,802
  1,884
  1,970
  2,060
  2,155
Cash from operations, $m
  16,153
  17,854
  19,653
  21,542
  23,519
  25,584
  27,737
  29,980
  32,314
  34,740
  37,232
  39,853
  42,577
  45,407
  48,350
  51,410
  54,594
  57,907
  61,358
  64,952
  68,698
  72,605
  76,681
  80,936
  85,379
  90,020
  94,872
  99,944
  105,249
  110,799
Maintenance CAPEX, $m
  -9,163
  -10,298
  -11,499
  -12,763
  -14,089
  -15,478
  -16,928
  -18,440
  -20,015
  -21,653
  -23,357
  -25,127
  -26,967
  -28,879
  -30,866
  -32,932
  -35,081
  -37,316
  -39,642
  -42,064
  -44,588
  -47,219
  -49,962
  -52,824
  -55,812
  -58,932
  -62,191
  -65,598
  -69,161
  -72,886
New CAPEX, $m
  -16,348
  -17,291
  -18,204
  -19,104
  -19,995
  -20,883
  -21,775
  -22,676
  -23,592
  -24,530
  -25,495
  -26,494
  -27,532
  -28,615
  -29,748
  -30,936
  -32,185
  -33,499
  -34,883
  -36,341
  -37,880
  -39,503
  -41,215
  -43,022
  -44,928
  -46,939
  -49,060
  -51,296
  -53,653
  -56,136
Cash from investing activities, $m
  -25,511
  -27,589
  -29,703
  -31,867
  -34,084
  -36,361
  -38,703
  -41,116
  -43,607
  -46,183
  -48,852
  -51,621
  -54,499
  -57,494
  -60,614
  -63,868
  -67,266
  -70,815
  -74,525
  -78,405
  -82,468
  -86,722
  -91,177
  -95,846
  -100,740
  -105,871
  -111,251
  -116,894
  -122,814
  -129,022
Free cash flow, $m
  -9,358
  -9,735
  -10,050
  -10,325
  -10,566
  -10,778
  -10,966
  -11,136
  -11,293
  -11,443
  -11,620
  -11,769
  -11,923
  -12,087
  -12,265
  -12,458
  -12,672
  -12,907
  -13,167
  -13,454
  -13,770
  -14,116
  -14,496
  -14,910
  -15,361
  -15,850
  -16,380
  -16,950
  -17,564
  -18,224
Issuance/(repayment) of debt, $m
  13,011
  13,562
  14,278
  14,984
  15,683
  16,380
  17,079
  17,786
  18,504
  19,240
  19,997
  20,781
  21,595
  22,444
  23,333
  24,265
  25,244
  26,275
  27,360
  28,504
  29,711
  30,984
  32,327
  33,744
  35,239
  36,816
  38,480
  40,233
  42,082
  44,030
Issuance/(repurchase) of shares, $m
  2,000
  1,910
  1,806
  1,668
  1,500
  1,304
  1,083
  839
  576
  295
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  15,011
  15,472
  16,084
  16,652
  17,183
  17,684
  18,162
  18,625
  19,080
  19,535
  19,997
  20,781
  21,595
  22,444
  23,333
  24,265
  25,244
  26,275
  27,360
  28,504
  29,711
  30,984
  32,327
  33,744
  35,239
  36,816
  38,480
  40,233
  42,082
  44,030
Total cash flow (excl. dividends), $m
  5,652
  5,737
  6,034
  6,327
  6,617
  6,906
  7,196
  7,489
  7,787
  8,092
  8,377
  9,012
  9,672
  10,357
  11,068
  11,806
  12,572
  13,368
  14,193
  15,050
  15,941
  16,868
  17,831
  18,834
  19,878
  20,966
  22,100
  23,283
  24,518
  25,807
Retained Cash Flow (-), $m
  -8,371
  -8,817
  -9,283
  -9,742
  -10,196
  -10,650
  -11,104
  -11,564
  -12,031
  -12,509
  -13,001
  -13,511
  -14,040
  -14,592
  -15,170
  -15,776
  -16,413
  -17,083
  -17,788
  -18,532
  -19,317
  -20,145
  -21,018
  -21,939
  -22,911
  -23,937
  -25,018
  -26,158
  -27,360
  -28,627
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -2,719
  -3,080
  -3,249
  -3,415
  -3,580
  -3,744
  -3,908
  -4,075
  -4,244
  -4,417
  -4,624
  -4,499
  -4,368
  -4,235
  -4,102
  -3,970
  -3,840
  -3,715
  -3,595
  -3,482
  -3,376
  -3,277
  -3,187
  -3,106
  -3,033
  -2,971
  -2,918
  -2,875
  -2,843
  -2,820
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  -2,541
  -2,673
  -2,600
  -2,501
  -2,380
  -2,240
  -2,086
  -1,922
  -1,750
  -1,575
  -1,410
  -1,158
  -937
  -747
  -585
  -452
  -342
  -255
  -187
  -134
  -94
  -65
  -44
  -29
  -19
  -12
  -7
  -4
  -3
  -1
Current shareholders' claim on cash, %
  95.9
  92.6
  89.8
  87.6
  85.8
  84.5
  83.4
  82.7
  82.2
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0
  82.0

Korea Electric Power Corporation (KEPCO) is an integrated electric utility company engaged in the transmission and distribution of electricity in the Republic of Korea. Its segments include transmission and distribution, nuclear power generation and thermal power generation and all others . The transmission and distribution segment, which is operated by KEPCO, comprise operations related to the transmission, distribution and sale to end-users of electricity. The nuclear power generation segment, which is engaged in the nuclear, hydro, pumping-up power generation. The thermal power generation segment, which is engaged in bituminous coal, anthracite, liquefied natural gas (LNG) power generation. And the Other Segment comprises operations related to the plant design, power generation equipment assembly, nuclear raw materials supplement, electricity IT service, renewable source power generation and financial investment on overseas businesses.

FINANCIAL RATIOS  of  Korea Electric Power Corporation (KEP)

Valuation Ratios
P/E Ratio 1.5
Price to Sales 0.2
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow 0.6
Price to Free Cash Flow 2.3
Growth Rates
Sales Growth Rate 2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14%
Cap. Spend. - 3 Yr. Gr. Rate -3.2%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 62.9%
Total Debt to Equity 75.5%
Interest Coverage 6
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital 5.6%
Ret/ On T. Cap. - 3 Yr. Avg. 6.3%
Return On Equity 10.2%
Return On Equity - 3 Yr. Avg. 12.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 35.7%
EBITDA Margin - 3 Yr. Avg. 36.9%
Operating Margin 19.8%
Oper. Margin - 3 Yr. Avg. 16.6%
Pre-Tax Margin 17.5%
Pre-Tax Margin - 3 Yr. Avg. 18.8%
Net Profit Margin 11.7%
Net Profit Margin - 3 Yr. Avg. 13%
Effective Tax Rate 32%
Eff/ Tax Rate - 3 Yr. Avg. 31.3%
Payout Ratio 29.9%

KEP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KEP stock intrinsic value calculation we used $55667 million for the last fiscal year's total revenue generated by Korea Electric Power Corporation. The default revenue input number comes from 0001 income statement of Korea Electric Power Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KEP stock valuation model: a) initial revenue growth rate of 12.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7%, whose default value for KEP is calculated based on our internal credit rating of Korea Electric Power Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Korea Electric Power Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KEP stock the variable cost ratio is equal to 80.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KEP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Korea Electric Power Corporation.

Corporate tax rate of 27% is the nominal tax rate for Korea Electric Power Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KEP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KEP are equal to 237%.

Life of production assets of 14.4 years is the average useful life of capital assets used in Korea Electric Power Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KEP is equal to 9.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $67249.6904025 million for Korea Electric Power Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1283.943 million for Korea Electric Power Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Korea Electric Power Corporation at the current share price and the inputted number of shares is $17.7 billion.

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