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Issuer Flash: Korea Midland Power 1Q2026 Results

Issuer Flash: Korea Midland Power 1Q2026 Results

Report date: 2026-05-22 Event date: 2026-05-15 Event title: Q1 2026 Results

1. Flash Conclusion

Korea Midland Power (company abbreviation: KOMIPO; Ticker: KOMIPW)’s 1Q2026 results are credit-neutral with a mildly negative bias. Revenue increased slightly year on year, but operating profit and net profit declined, and the company has not yet arrested the margin deterioration that has continued since 2025. Although a single quarter should not be used to judge the full year, the results reinforce the view set out in the issuer summary: “strong when support is incorporated, but standalone financials and short-term debt remain monitoring items.”

Support remains in place. KOMIPO is one of Korea’s major generation subsidiaries, 100% owned by KEPCO. As of end-March 2026, it had installed capacity of 10,781MW, 1Q electricity sales volume of 10,445GWh, and a sales volume share of 7.7%. Its regulated business base, under which it sells to KEPCO through KPX, its domestic AAA/A1 ratings and high international ratings, and its continued access to the bond market remain central to its credit profile. However, these factors support expectations of support and market access; they are separate from an explicit guarantee on individual bonds.

At the same time, the results do not indicate ample standalone financial headroom. Current financial liabilities increased to KRW 2.106tn as of end-March 2026, while cash plus current financial assets remained at approximately KRW 296bn. Operating cash flow was positive, but it was insufficient to absorb investing cash outflows, and financing cash flow turned positive due to short-term borrowings and bond issuance. Bond investors need to distinguish support expectations from explicit guarantees, and monitor margins, operating cash flow, refinancing of short-term debt, and investment for the generation mix transition from 2Q onward.

2. What Was Announced

On 2026-05-15, KOMIPO disclosed its 1Q2026 quarterly report on DART. Consolidated revenue was KRW 1,575.0bn, operating profit was KRW 72.0bn, and net profit was KRW 28.0bn. In the same period of the previous year, revenue was KRW 1,545.3bn, operating profit was KRW 102.3bn, and net profit was KRW 46.0bn, meaning revenue increased but profit declined.

Metric 1Q2026 1Q2025 Credit interpretation
Revenue 1,575.0 1,545.3 KRW bn. Sales volume and revenue have not materially deteriorated
Operating profit 72.0 102.3 Margins declined. Breakdown of fuel costs, SMP, capacity payments, settlement adjustment factor, and FX should be checked
Net profit 28.0 46.0 Profitability remained positive, but the earnings buffer narrowed
Operating CF 94.0 63.8 Positive, but below investing outflows
Investing CF -231.9 -193.5 Burden from generation mix transition and capex continues
Financing CF 140.7 100.8 Reliance on external funding should be monitored

On the balance sheet, total assets were KRW 14.691tn, total liabilities were KRW 9.655tn, and equity was KRW 5.036tn as of end-March 2026. Compared with end-2025, total assets and equity decreased, while total liabilities increased. Current financial liabilities were KRW 2.106tn, up from KRW 1.844tn at end-2025.

3. Credit Read-Through

First, the 1Q results do not invalidate the stability of the business base. KOMIPO maintained sufficient scale as a major generation subsidiary within the KEPCO group, with a 7.7% share of electricity sales volume. Its role within Korea’s electricity system and its market access continue to provide support in absorbing short-term earnings volatility.

Second, margins and liquidity remain monitoring items. The 1Q operating margin was 4.6%, below the 5.3% recorded for full-year 2025. Cash and current financial assets were far below short-term financial liabilities, and financing cash flow was positive in 1Q due to a net increase in short-term borrowings and bond issuance. This structure is manageable for a highly rated issuer, but on-hand liquidity itself is not particularly thick.

Third, the funding burden from generation mix transition investment continues. Boryeong New Combined Cycle, Haman Combined Cycle, Yongin Integrated Energy, Jeju LNG, and pumped-storage power projects should improve the company’s policy alignment over the long term, but they weigh on investing cash flow in the short to medium term. The 1Q results showed that there may be quarters in which operating cash flow alone cannot absorb the investment burden.

4. What To Watch Next

The next items to monitor are operating margin, operating cash flow, current financial liabilities, bond issuance and redemption, and KEPCO’s tariff and financial environment from 2Q onward. The latest full rating agency reports, individual bond guarantees, ranking and covenants, undrawn credit lines, and maturity ladder have not yet been confirmed; for investment decisions on specific instruments, the offering documents should be reviewed.

5. Sources

6. Unverified / Pending