Intrinsic value of Korea Electric Power ADR - KEP

Previous Close

$12.38

  Intrinsic Value

$267.08

stock screener

  Rating & Target

str. buy

+999%

Previous close

$12.38

 
Intrinsic value

$267.08

 
Up/down potential

+999%

 
Rating

str. buy

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 0.8

 

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
  69,866
  77,547
  85,608
  94,044
  102,856
  112,044
  121,612
  131,566
  141,916
  152,674
  163,853
  175,470
  187,544
  200,096
  213,150
  226,730
  240,864
  255,583
  270,917
  286,900
  303,568
  320,959
  339,112
  358,069
  377,875
  398,575
  420,219
  442,857
  466,544
Variable operating expenses, $m
  50,355
  56,214
  62,381
  68,854
  75,629
  82,704
  90,082
  97,765
  105,758
  114,070
  122,596
  131,573
  140,902
  150,597
  160,676
  171,158
  182,063
  193,413
  205,232
  217,545
  230,379
  243,764
  257,728
  272,305
  287,528
  303,432
  320,054
  337,434
  355,612
  374,632
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
  56,214
  62,381
  68,854
  75,629
  82,704
  90,082
  97,765
  105,758
  114,070
  122,596
  131,573
  140,902
  150,597
  160,676
  171,158
  182,063
  193,413
  205,232
  217,545
  230,379
  243,764
  257,728
  272,305
  287,528
  303,432
  320,054
  337,434
  355,612
  374,632
Operating income, $m
  12,215
  13,652
  15,166
  16,754
  18,416
  20,152
  21,962
  23,846
  25,808
  27,847
  30,078
  32,280
  34,568
  36,947
  39,420
  41,992
  44,667
  47,452
  50,351
  53,372
  56,521
  59,804
  63,231
  66,807
  70,541
  74,443
  78,521
  82,785
  87,245
  91,911
EBITDA, $m
  22,625
  25,263
  28,040
  30,955
  34,005
  37,192
  40,514
  43,973
  47,573
  51,315
  55,205
  59,247
  63,448
  67,814
  72,352
  77,072
  81,983
  87,094
  92,416
  97,960
  103,740
  109,767
  116,055
  122,619
  129,474
  136,635
  144,120
  151,946
  160,132
  168,697
Interest expense (income), $m
  1,762
  3,487
  4,190
  4,922
  5,693
  6,502
  7,349
  8,234
  9,156
  10,116
  11,116
  12,155
  13,234
  14,357
  15,523
  16,735
  17,995
  19,305
  20,668
  22,087
  23,564
  25,104
  26,708
  28,381
  30,127
  31,949
  33,852
  35,840
  37,918
  40,091
  42,363
Earnings before tax, $m
  8,728
  9,463
  10,243
  11,060
  11,913
  12,802
  13,728
  14,691
  15,691
  16,731
  17,923
  19,045
  20,212
  21,424
  22,685
  23,997
  25,362
  26,783
  28,264
  29,808
  31,417
  33,096
  34,849
  36,680
  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
  7,232
  7,631
  8,048
  8,483
  8,936
  9,409
  9,904
  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
  11,455
  12,214
  13,084
  13,903
  14,755
  15,640
  16,560
  17,518
  18,514
  19,552
  20,633
  21,760
  22,934
  24,160
  25,440
  26,776
  28,172
  29,632
  31,157
  32,753
  34,423
  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
  191,933
  214,312
  237,874
  262,600
  288,480
  315,509
  343,692
  373,042
  403,577
  435,326
  468,324
  502,616
  538,251
  575,288
  613,792
  653,833
  695,490
  738,848
  783,997
  831,034
  880,062
  931,191
  984,536
  1,040,220
  1,098,371
  1,159,125
  1,222,623
  1,289,016
  1,358,458
  1,431,116
Adjusted assets (=assets-cash), $m
  191,933
  214,312
  237,874
  262,600
  288,480
  315,509
  343,692
  373,042
  403,577
  435,326
  468,324
  502,616
  538,251
  575,288
  613,792
  653,833
  695,490
  738,848
  783,997
  831,034
  880,062
  931,191
  984,536
  1,040,220
  1,098,371
  1,159,125
  1,222,623
  1,289,016
  1,358,458
  1,431,116
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
  148,291
  165,582
  183,786
  202,890
  222,885
  243,769
  265,544
  288,219
  311,811
  336,341
  361,837
  388,331
  415,864
  444,479
  474,228
  505,165
  537,350
  570,849
  605,732
  642,073
  679,953
  719,457
  760,672
  803,695
  848,624
  895,563
  944,623
  995,919
  1,049,572
  1,105,709
Working capital, $m
  5,694
  6,358
  7,057
  7,790
  8,558
  9,360
  10,196
  11,067
  11,973
  12,914
  13,893
  14,911
  15,968
  17,067
  18,209
  19,397
  20,632
  21,919
  23,258
  24,653
  26,108
  27,625
  29,207
  30,859
  32,584
  34,387
  36,270
  38,240
  40,300
  42,455
Total debt, $m
  77,588
  91,150
  105,428
  120,412
  136,095
  152,475
  169,554
  187,340
  205,844
  225,084
  245,081
  265,862
  287,457
  309,901
  333,234
  357,499
  382,744
  409,019
  436,379
  464,883
  494,594
  525,578
  557,906
  591,650
  626,890
  663,706
  702,186
  742,420
  784,502
  828,533
Total liabilities, $m
  116,311
  129,873
  144,152
  159,136
  174,819
  191,198
  208,278
  226,063
  244,568
  263,807
  283,805
  304,585
  326,180
  348,625
  371,958
  396,223
  421,467
  447,742
  475,102
  503,606
  533,318
  564,302
  596,629
  630,374
  665,613
  702,430
  740,910
  781,143
  823,226
  867,256
Total equity, $m
  75,622
  84,439
  93,722
  103,464
  113,661
  124,311
  135,415
  146,978
  159,009
  171,518
  184,520
  198,031
  212,071
  226,664
  241,834
  257,610
  274,023
  291,106
  308,895
  327,427
  346,744
  366,889
  387,907
  409,847
  432,758
  456,695
  481,714
  507,872
  535,233
  563,860
Total liabilities and equity, $m
  191,933
  214,312
  237,874
  262,600
  288,480
  315,509
  343,693
  373,041
  403,577
  435,325
  468,325
  502,616
  538,251
  575,289
  613,792
  653,833
  695,490
  738,848
  783,997
  831,033
  880,062
  931,191
  984,536
  1,040,221
  1,098,371
  1,159,125
  1,222,624
  1,289,015
  1,358,459
  1,431,116
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
  11,455
  12,214
  13,084
  13,903
  14,755
  15,640
  16,560
  17,518
  18,514
  19,552
  20,633
  21,760
  22,934
  24,160
  25,440
  26,776
  28,172
  29,632
  31,157
  32,753
  34,423
  36,170
Depreciation, amort., depletion, $m
  10,410
  11,610
  12,875
  14,201
  15,590
  17,040
  18,552
  20,127
  21,765
  23,469
  25,128
  26,967
  28,879
  30,867
  32,932
  35,081
  37,316
  39,642
  42,065
  44,588
  47,219
  49,962
  52,824
  55,812
  58,932
  62,192
  65,599
  69,161
  72,887
  76,785
Funds from operations, $m
  16,781
  18,518
  20,352
  22,275
  24,286
  26,386
  28,574
  30,851
  33,220
  35,682
  38,211
  40,871
  43,634
  46,506
  49,493
  52,599
  55,830
  59,194
  62,698
  66,348
  70,153
  74,123
  78,264
  82,588
  87,105
  91,823
  96,756
  101,914
  107,310
  112,956
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
  45,408
  48,350
  51,411
  54,594
  57,908
  61,358
  64,953
  68,699
  72,606
  76,682
  80,937
  85,379
  90,021
  94,872
  99,945
  105,250
  110,800
Maintenance CAPEX, $m
  -9,163
  -10,298
  -11,499
  -12,763
  -14,090
  -15,478
  -16,928
  -18,441
  -20,015
  -21,654
  -23,357
  -25,128
  -26,967
  -28,879
  -30,867
  -32,932
  -35,081
  -37,316
  -39,642
  -42,065
  -44,588
  -47,219
  -49,962
  -52,824
  -55,812
  -58,932
  -62,192
  -65,599
  -69,161
  -72,887
New CAPEX, $m
  -16,349
  -17,291
  -18,204
  -19,104
  -19,995
  -20,883
  -21,775
  -22,676
  -23,592
  -24,530
  -25,495
  -26,494
  -27,533
  -28,616
  -29,748
  -30,937
  -32,185
  -33,499
  -34,883
  -36,342
  -37,880
  -39,503
  -41,216
  -43,023
  -44,929
  -46,939
  -49,060
  -51,296
  -53,653
  -56,137
Cash from investing activities, $m
  -25,512
  -27,589
  -29,703
  -31,867
  -34,085
  -36,361
  -38,703
  -41,117
  -43,607
  -46,184
  -48,852
  -51,622
  -54,500
  -57,495
  -60,615
  -63,869
  -67,266
  -70,815
  -74,525
  -78,407
  -82,468
  -86,722
  -91,178
  -95,847
  -100,741
  -105,871
  -111,252
  -116,895
  -122,814
  -129,024
Free cash flow, $m
  -9,359
  -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
  -14,911
  -15,361
  -15,851
  -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
  35,240
  36,817
  38,480
  40,234
  42,082
  44,031
Issuance/(repurchase) of shares, $m
  2,001
  1,910
  1,806
  1,668
  1,500
  1,304
  1,083
  840
  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  
  15,012
  15,472
  16,084
  16,652
  17,183
  17,684
  18,162
  18,626
  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
  35,240
  36,817
  38,480
  40,234
  42,082
  44,031
Total cash flow (excl. dividends), $m
  5,653
  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
  11,807
  12,573
  13,368
  14,193
  15,051
  15,941
  16,868
  17,831
  18,834
  19,878
  20,966
  22,100
  23,283
  24,518
  25,807
Retained Cash Flow (-), $m
  -8,372
  -8,817
  -9,283
  -9,742
  -10,197
  -10,650
  -11,104
  -11,564
  -12,031
  -12,509
  -13,001
  -13,511
  -14,040
  -14,593
  -15,170
  -15,776
  -16,413
  -17,083
  -17,789
  -18,533
  -19,317
  -20,145
  -21,018
  -21,939
  -22,912
  -23,937
  -25,018
  -26,159
  -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
  -2,842
  -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 ADR (KEP)

Valuation Ratios
P/E Ratio 1.3
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 2.1
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 $55667.4068862 million for the last fiscal year's total revenue generated by Korea Electric Power ADR. The default revenue input number comes from 0001 income statement of Korea Electric Power ADR. 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 ADR, 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 ADR.
    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 ADR.

Corporate tax rate of 27% is the nominal tax rate for Korea Electric Power ADR. 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 ADR 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 ADR - 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 61.905 million for Korea Electric Power ADR 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 ADR at the current share price and the inputted number of shares is $0.8 billion.

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