Issuer Summary: Korea Midland Power

Report date: 2026-05-22
Issuer: Korea Midland Power Co., Ltd.
Ticker: KOMIPW
Relevant bond context: Korea Midland Power Co., Ltd. domestic and international bonds; bond-specific guarantee, ranking and covenants are unverified in this report
Primary analytical frame: KEPCO wholly owned Korean power-generation subsidiary / government-related utility

1. Business Snapshot and Recent Developments

Korea Midland Power Co., Ltd. (“KOMIPO”) is a power-generation subsidiary wholly owned by Korea Electric Power Corporation (“KEPCO”), established in April 2001 through a physical spin-off from KEPCO as part of the restructuring of Korea’s power industry. KOMIPO should not be viewed as a conventional private independent power producer. Rather, it should be analysed as a government-related generation company embedded in Korea’s electricity supply framework, the KEPCO group, and the Korean government’s energy policy. For bond investors, the central question is how far the company’s generation capacity, sales to KEPCO through the Korea Power Exchange (“KPX”), ownership and business links with KEPCO, and high domestic and international ratings can absorb the risks from a thermal-power-heavy fuel-price exposure, replacement investment for ageing coal-fired assets, short-term financial liabilities, and the unverified legal guarantee status of individual bonds.

KOMIPO is headquartered in Boryeong-si, Chungcheongnam-do. In its FY2025 annual report filed on DART, the company discloses that it operates seven power plants, including the Boryeong Thermal Power Plant, with total generation capacity of 10,782MW at end-2025. In 2025, its domestic capacity share was 6.9%, power sales volume was 36,468GWh, and its power sales volume share was 6.7%. In 1Q2026, capacity was 10,781MW, capacity share was 6.8%, power sales volume was 10,445GWh, and power sales volume share was 7.7%. KOMIPO is therefore a sizeable component among KEPCO’s non-nuclear generation subsidiaries.

The company’s business model is based on selling generated electricity to KEPCO through KPX. Since this is not a business in which the generator directly sets retail prices for end-users, the credit analysis needs to consider not only electricity demand itself, but also the variable-cost-reflective power trading market, capacity payments, system marginal price, settlement adjustment factors, KEPCO’s financial condition, and the Korean government’s tariff and generation-mix policies. According to DART’s description, Korea’s power trading market is a variable-cost-reflective market at the generation-competition stage, in which numerous generation companies produce electricity and sell all of it to KEPCO through KPX. This supports the stability of the offtaker, but also means earnings are affected by the operation of the framework and policy decisions.

Recent results confirm the company’s strength including support considerations, but they are not strong enough to justify optimism based on the standalone financials alone. Full-year 2025 consolidated revenue was KRW5,790.4bn, down sharply from KRW7,232.9bn in 2024, while operating profit also declined from KRW481.3bn to KRW307.1bn. Even so, KOMIPO secured net income of KRW179.8bn, a material improvement from the KRW17.6bn profit recorded in 2023. In 1Q2026, revenue was KRW1,575.0bn, operating profit was KRW72.0bn, and net income was KRW28.0bn. Revenue was slightly higher year on year, but operating profit and net income declined.

On the balance sheet, the increase in short-term financial liabilities from end-2025 to end-March 2026 is notable. At end-March 2026, consolidated total assets were KRW14,690.7bn, total liabilities were KRW9,654.8bn, and equity was KRW5,035.9bn. Current financial liabilities were KRW2,106.2bn, up from KRW1,844.1bn at end-2025. Cash and current financial assets together do not sufficiently cover short-term financial liabilities. KOMIPO is therefore an issuer that continues to refinance using a combination of liquidity on hand, domestic and international bond markets, short-term funding markets, KEPCO group credit strength, and the institutional stability of its business.

At the same time, KOMIPO has a strong funding base. The FY2025 DART annual report and KOMIPO’s official IR information show that the company maintains ratings of Aa2 from Moody’s, AA from S&P, AAA from domestic rating agencies, and short-term A1. KOMIPO’s official credit ratings page also shows Fitch’s AA- rating. In 2026, DART disclosures relating to bond issuance, issuance results, and shelf-registration filings can also be confirmed, indicating continued access to the bond market. However, this is a strong credit support factor; it does not mean individual bonds carry an explicit guarantee from the Korean government or KEPCO.

The most important recent business change is replacement investment for ageing coal-fired and ageing combined-cycle generation assets. According to the 1Q2026 report, KOMIPO is constructing Boryeong New Combined Cycle Unit 1, a 500MW project replacing Boryeong Thermal Unit 5, with completion targeted for 2027, and is developing the 500MW Haman Combined Cycle project as a replacement for Boryeong Unit 6, with completion targeted for 2028. In addition, together with SK Innovation E&S, the company is pursuing the 1,050MW Yongin Integrated Energy Project, which will supply power and process heat to SK hynix’s semiconductor cluster in Yongin, with completion targeted for 2030. The Jeju LNG combined-cycle project of 150MW and pumped-storage projects of around 500MW each in Gurye and Bonghwa are also included in the medium- to long-term plan. The generation-mix transition reduces environmental and policy risks, but it also increases long-term investment burdens and refinancing needs.

This report assesses KOMIPO on three layers. First, as a generation company on a standalone basis, it is supported by its institutional offtaker and generation capacity, while fuel, environmental and investment burdens remain given its thermal-heavy profile. Second, as a wholly owned KEPCO subsidiary, it performs part of Korea’s electricity supply function, supporting strong expectations of parent and government-policy support. Third, bondholders’ legal claims depend on the terms of individual bonds, so support expectations need to be distinguished from explicit guarantees.

2. Industry Position and Franchise Strength

KOMIPO’s business foundation is supported less by conventional competitive advantage than by its role within Korea’s electricity system. As a generation company, it is not a retail utility serving a broad base of end-customers. It owns and operates generation assets and sells power to KEPCO through KPX. Therefore, generation capacity, generation mix, the power trading framework, and indispensability within the KEPCO group are more central to the credit analysis than brand strength or customer diversification.

At end-2025, KOMIPO’s capacity share of 6.9% was not large enough to dominate Korea’s overall electricity supply on a standalone basis. However, as one of KEPCO’s non-nuclear generation subsidiaries, it is a scale player essential to supply stability. Its 2025 power sales volume of 36,468GWh represented 6.7% of sales volume among Korean generation companies. In 1Q2026, its sales volume share rose to 7.7%, temporarily increasing its presence in actual generation. Electricity supply stability is maintained not by individual power plants alone, but by the group of generation subsidiaries across the KEPCO group. A disruption in KOMIPO’s funding would therefore be undesirable from a policy perspective.

Korea’s power trading framework is an important support for KOMIPO’s earnings stability. According to DART’s description, the current market is a variable-cost-reflective generation market, and under the principle of economic dispatch, power is supplied sequentially from generators with lower variable costs. Generation companies sell to KEPCO through KPX and earn revenue under a settlement system that includes capacity payments and the system marginal price. This mechanism supports a certain degree of recovery of generators’ fixed and variable costs.

However, institutional sales are not a full profit guarantee. Generation companies are affected by fuel unit costs, foreign exchange, plant utilisation rates, environmental costs, and renewal capex. In addition, KEPCO’s retail tariffs, fuel-cost adjustments, and the government’s tariff policy affect the allocation of earnings across the group. The fact that KOMIPO can sell its generated electricity to KEPCO through the institutional framework is a major support, but annual profits still move with SMP, capacity payments, settlement adjustment factors, and time lags in fuel-cost recovery. The large fluctuations in operating profit from 2023 to 2025 show that this framework provides stability but does not eliminate earnings volatility.

A key strength of the business foundation is its link to Korea’s electricity demand and public policy. Electricity is fundamental to households, industry and public infrastructure, and the social cost of supply disruption is high. Through generation sites such as Boryeong, Incheon, Seoul, Shinseocheon, Jeju, Sejong and Shin-Boryeong, KOMIPO operates thermal power, LNG combined-cycle, heavy oil, wind, solar, solid fuel and fuel-cell generation. The generation mix is thermal-heavy, which contributes to stable supply for the power system, but also brings burdens related to decarbonisation policy, emissions allowances, environmental equipment and ageing-asset management.

Peer comparison places KOMIPO alongside Korea East-West Power, Korea South-East Power, Korea Western Power and Korea Southern Power as non-nuclear generation subsidiaries under KEPCO. Its risk profile differs from that of Korea Hydro & Nuclear Power, a nuclear-focused generator with lower fuel-cost exposure. KOMIPO is more sensitive to coal and LNG fuel prices, generation-mix transition investment, and carbon-related costs. Compared with private independent power producers, however, its KEPCO ownership, institutional sales, domestic AAA rating, and high international ratings provide a credit-relevant funding advantage.

In conclusion, KOMIPO’s business foundation is supported by institutional sales, its role within the KEPCO group, generation capacity, and policy importance, rather than by the competitive strength of a private generation company. This strength materially complements the issuer credit profile, but the company’s earnings and cash flow remain exposed to fuel, FX, operation of the framework, and investment burdens.

3. Segment Assessment

For KOMIPO’s credit analysis, it is more useful to assess the nature of its generation assets and generation-transition investments than its accounting segments. The current repayment base is centred on domestic thermal and LNG combined-cycle generation and institutional sales through KPX/KEPCO. Future credit strength, meanwhile, depends on whether the company can continue to provide stable supply while replacing ageing coal-fired assets with LNG combined-cycle, pumped storage and renewable-energy-related investments without excessive debt growth.

The first core component is thermal generation centred on Boryeong. KOMIPO is one of Korea’s representative thermal generation companies, and its existing thermal assets provide the foundation for capacity and earnings. These thermal assets support demand within KPX’s dispatch and settlement framework and have policy value as generation capacity. From the perspective of stable supply in particular, existing thermal assets continue to play a role in offsetting the intermittency of renewable generation.

However, thermal generation, including coal, is also a credit constraint. Fuel-price and FX volatility move earnings, while emissions allowances, environmental regulation, asset renewal, and closures of ageing facilities create burdens. KOMIPO’s FY2025 DART annual report also explains that the company is pursuing replacement construction for ageing coal-fired and ageing combined-cycle assets and new power-plant construction in order to implement the government’s energy transition policy. This increases policy alignment, but it may continue to pressure free cash flow.

The second pillar is the transition to LNG combined-cycle generation. According to the 1Q2026 report, Boryeong New Combined Cycle Unit 1, a 500MW project replacing Boryeong Thermal Unit 5, is targeted for completion in 2027, while Haman Combined Cycle, a 500MW project replacing Boryeong Unit 6, is targeted for completion in 2028. LNG combined-cycle generation may ease carbon-related constraints relative to coal and improve system flexibility. However, because it is affected by LNG prices and the won exchange rate, fuel-cost recovery and SMP movements are important. The asset renewal itself also requires substantial funding.

The third component is the Yongin Integrated Energy Project. KOMIPO is jointly pursuing with SK Innovation E&S a 1,050MW project to supply electricity and process heat to SK hynix’s semiconductor cluster in Yongin. The 1Q2026 report indicates a construction start in 2026 and completion targeted for 2030. This project may represent a growth opportunity because it supplies an industrial cluster with relatively visible demand. At the same time, the construction period, joint-project structure, funding burden, customer contract terms, and operating risks including heat supply need to be verified.

The fourth component is Jeju LNG combined-cycle and pumped-storage generation. The company plans a 150MW LNG combined-cycle plant for the Jeju region to secure grid flexibility, with construction targeted to start in 2028 and completion targeted for 2030. It also plans to build pumped-storage facilities of around 500MW each in Gurye and Bonghwa, with targeted completion in 2034 for Gurye and 2036 for Bonghwa. Pumped storage becomes increasingly important for grid stability as the renewable-energy share rises, but it has a long investment recovery period and requires verification of construction permits, environmental matters, local acceptance, and funding.

The fifth component is renewable energy and overseas business. KOMIPO’s official overview states that, in addition to thermal and LNG generation, the company operates wind, solar, solid fuel and fuel-cell generation. Its 2040 vision sets medium- to long-term targets such as 60% carbon-free generation volume, KRW1.5tn in overseas renewable-energy revenue, and a 70% greenhouse-gas reduction rate. These targets improve long-term policy alignment, but the company’s current debt repayment capacity still depends heavily on existing domestic generation sources and institutional sales. Renewable and overseas projects are sources of diversification and growth, while also carrying project, FX, host-country regulatory, and construction-delay risks.

The segment view requires reading the thermal-heavy present and the future transition toward LNG, pumped storage and renewables together. Current thermal assets support credit strength, but they also become a long-term constraint. New investment may reduce these constraints, but in the short to medium term it increases funding needs. KOMIPO’s credit strength depends on whether it can absorb this transition through institutional earnings and market funding.

4. Financial Profile and Analysis

KOMIPO’s financial profile is characterised by a sharp improvement from the low-profitability phase in 2023, continued profitability but lower revenue and earnings in 2025, and lower margins in 1Q2026 despite modest revenue growth. Looking only at the standalone financials, it is difficult to say the balance sheet is strong enough to support domestic AAA and high international ratings on its own; the final credit profile incorporates substantial institutional, parent and government-related support. At the same time, continued profitability in 2025 and 1Q2026, operating cash flow, and the long-term asset base provide a foundation for the company’s ability to refinance under normal conditions.

On earnings, revenue volatility is significant. Consolidated revenue was KRW7,762.3bn in 2023, KRW7,232.9bn in 2024, and KRW5,790.4bn in 2025. Power sales volume also declined from 43,951GWh in 2024 to 36,468GWh in 2025, reflecting changes in sales volume, prices, fuel costs, and the settlement environment. Operating profit improved from KRW128.4bn in 2023 to KRW481.3bn in 2024, before declining to KRW307.1bn in 2025. The 2025 operating margin was 5.3%, lower than 6.7% in 2024 but higher than 1.7% in 2023.

In 1Q2026, revenue of KRW1,575.0bn was slightly above the KRW1,545.3bn recorded in the prior-year period, but operating profit declined from KRW102.3bn to KRW72.0bn. Net income also fell from KRW46.0bn to KRW28.0bn. Revenue stability can be confirmed, but pressure from costs, fuel, finance income and expense, FX, and investment-related costs needs to be viewed carefully. It is too early to judge the full-year outcome from 1Q alone, but it is difficult to say that the 2025 earnings-decline trend has fully stopped.

Note: FY2023 to FY2025 are based on the DART FY2025 annual report, and 1Q2026 is based on the DART 1Q2026 quarterly report. 1Q2026 figures are quarterly numbers and should not be compared mechanically with full-year figures. The current ratio is low, but current liabilities include items other than financial liabilities; it should therefore be treated as a supplementary indicator separate from short-term financial debt coverage.

Cash flow shows the substance of credit strength better than earnings. Full-year 2025 operating cash flow was KRW1,023.0bn, exceeding the KRW864.5bn outflow from investing cash flow. On a simple basis, a certain amount of internal cash remained after investment. However, financing cash flow was a KRW295.0bn outflow, reflecting continuing funding needs such as bond redemption, lease payments, long-term debt repayment and dividends. 2025 was a year in which operating cash flow absorbed the investment burden, but given replacement of ageing thermal assets, LNG combined-cycle, pumped storage and the Yongin project, it is too early to conclude that medium-term free cash flow will be consistently positive.

In 1Q2026, operating cash flow was KRW94.0bn, investing cash flow was a KRW231.9bn outflow, and financing cash flow was a KRW140.7bn inflow. Financing inflows included a KRW116.7bn net increase in short-term borrowings and KRW100.0bn of bond issuance. This indicates that the company funded quarterly investment and working-capital needs through external financing. KOMIPO’s annual repayment capacity should not be assessed solely from 1Q operating cash flow, but the importance of short-term financial liabilities and market funding has increased.

Note: Unit is KRW100mn. Financial liabilities are organised based on financial-liability line items in DART financial statements and are not adjusted interest-bearing debt as calculated by rating agencies.

Three points should be drawn from these financial tables. First, KOMIPO maintains profitability and operating cash flow, giving it a base of internal funds needed for normal refinancing. Second, margins and equity are not stable, and leverage rose again in 1Q2026. Third, liquidity on hand is thin relative to the size of short-term financial liabilities, and a large part of credit strength is supported by domestic and international market access, KEPCO ownership, institutional sales, and government-related status.

Financially, KOMIPO is a neutral to somewhat constraining factor underpinning support-inclusive credit strength, rather than a standalone source of strong credit support. Continued profitability and operating cash flow in 2025 are reassuring, but given short-term debt, investment burdens, margin decline and capital reduction, it is difficult to explain the high ratings on standalone financials alone. In analysing KOMIPO, it is important not to separate financial indicators from the support structure, while also not using the support structure to overlook financial deterioration.

5. Structural Considerations for Bondholders

For bondholders, the most important point is not to confuse KOMIPO’s high ratings and government-related status with an explicit Korean government guarantee or a direct KEPCO guarantee. KOMIPO is a generation subsidiary wholly owned by KEPCO and plays an important role in Korea’s electricity supply. Based on the official rating levels and issuer attributes, it is natural to read the ratings as support-inclusive. However, because the latest full rating agency reports have not been obtained, the level of support, standalone credit profile and rating triggers used by rating agencies are unverified. Whether an individual bond is guaranteed, and its ranking, security, covenants, cross-default provisions and governing law, must be confirmed in the relevant issuance documents.

The support structure should be divided into at least six layers. The first is an explicit guarantee. This is a guarantee written into the contract of an individual bond and exists only when the Korean government or KEPCO legally guarantees payment. This report has not confirmed that KOMIPO’s ordinary debt carries an explicit guarantee from the Korean government or KEPCO. The second is KEPCO ownership and expectations of parent support. KEPCO owns 100% of KOMIPO, and KOMIPO supports KEPCO’s electricity supply function. The third is the Korean government’s policy importance. From the perspectives of stable electricity supply, generation-mix transition and public tariff policy, the government has strong incentives to maintain the creditworthiness of the KEPCO group.

The fourth is support incorporated in the ratings. Based on KOMIPO’s official rating levels and issuer attributes, it is natural to read the company’s international ratings as reflecting not only standalone financials, but also KEPCO ownership and its importance within Korea’s electricity framework. However, support notching, standalone credit strength, and downgrade/upgrade triggers are unverified because the latest full rating agency reports have not been obtained. The fifth is institutional earnings. Sales to KEPCO through KPX, capacity payments, system marginal price and the settlement framework support ordinary operating revenue. The sixth is the individual bond contract. Investors’ ultimate claims depend on the issuer, guarantee, security, ranking, governing law, paying agent, tax, acceleration provisions and change-of-control provisions.

This breakdown is important to avoid simplifying KOMIPO as “safe because it is close to the Korean government.” Support expectations are a major support for credit strength and strengthen KOMIPO’s funding base. However, where the debt is not directly paid by the government, investors need to analyse KOMIPO’s own financials, KEPCO’s stance as parent, the operation of the electricity framework, and contractual protection under individual bonds together.

There is also a structural constraint from KOMIPO’s position as a generation-company subsidiary. Its funding depends on its own generation revenue, bond-market access, bank and short-term funding markets, and credit within the parent group. KEPCO parent debt and KOMIPO subsidiary debt are not the same. KEPCO is central to the overall electricity framework, while KOMIPO performs the generation function beneath it. This distinction affects who provides what form of support, when, under stress, and which legal entity individual bond investors have claims against.

Based on currently published information, the fact that KOMIPO continues to make bond-issuance-related disclosures on DART in 2026 is evidence of market access. However, bond terms cannot be confirmed without individually reviewing shelf-registration statements, amended shelf-registration statements, prospectuses, and securities issuance result reports. For investment in a specific issue, guarantee status, use of proceeds, maturity, currency, interest rate, early redemption, negative pledge, cross-default, change of control, tax, and governing law must always be checked.

6. Capital Structure, Liquidity and Funding

KOMIPO’s capital structure shows both the scale of its generation assets and its reliance on market funding. At end-March 2026, consolidated total assets were KRW14,690.7bn, total liabilities were KRW9,654.8bn, and equity was KRW5,035.9bn. Total financial liabilities were KRW7,622.0bn, of which current financial liabilities were KRW2,106.2bn. Short-term borrowings were KRW934.2bn and current bonds were KRW1,134.0bn, indicating a large short-term refinancing and redemption burden.

Liquidity on hand is not thick. At end-March 2026, cash and cash equivalents were KRW130.1bn and current financial assets were KRW166.3bn, totalling only KRW296.4bn. This was about 14% of current financial liabilities of KRW2,106.2bn. The ratio was also about 14% at end-2025, meaning KOMIPO is not a company that holds large cash balances to cover short-term debt. It is an issuer that manages funding through operating cash flow, bond issuance, short-term borrowings, bond refinancing, and KEPCO group credit strength.

This structure is not unusual for a highly rated utility generation company. Power-generation companies are capital intensive and combine long- and short-term debt against long-term assets. For government-related issuers such as KOMIPO, access to the domestic bond market and short-term funding market is a large part of credit strength. However, if higher interest rates, market disruption, changes in investor perception of the Korean sovereign or KEPCO, and increased working-capital needs from higher fuel prices occur together, refinancing risk could surface more easily.

The official Debt Repayment Plan page shows multiple won-denominated bonds and foreign-currency global bonds issued in the past. For example, it shows a USD300mn global bond with a 1.25% coupon maturing on 9 August 2026, and a USD300mn global bond with a 3.625% coupon maturing on 21 April 2027. However, because the update scope of this English-language page may be limited, the latest maturity ladder needs to be supplemented by DART financial notes and 2026 issuance-related disclosures.

The 1Q2026 cash flow statement illustrates the importance of external funding. Operating cash flow was KRW94.0bn, while investing cash flow was a KRW231.9bn outflow, and financing cash flow was a KRW140.7bn inflow. A KRW116.7bn net increase in short-term borrowings, KRW100.0bn of bond issuance, and KRW6.0bn of bond redemption can be confirmed. This shows that in quarters when investment and working-capital needs are not fully covered by operating cash flow, the company depends on market funding.

Funding support is clear. Domestic AAA/A1 ratings, international Aa2/AA/AA- indications, full KEPCO ownership, and importance to Korea’s electricity supply suggest strong market access under normal conditions. Multiple issuance-related disclosures on DART in 2026 also show that the company is actually using capital markets.

On the other hand, liquidity is a monitoring item. Thin cash and current financial assets, large current financial liabilities, and financing cash inflow in 1Q2026 indicate that KOMIPO operates on the premise that refinancing markets function. This structure is likely to be tolerated as long as ratings remain high, but if investor demand for KEPCO or Korean quasi-sovereign exposure weakens, funding costs and maturity dispersion become more important.

7. Rating Agency View

Based on KOMIPO’s official rating levels and issuer attributes, its ratings are naturally read as reflecting not only standalone financials, but also KEPCO ownership, Korea’s electricity framework, and importance to government policy. However, because this report has not obtained the latest full rating agency reports, the extent of support incorporation and the standalone credit assessment used by each agency are unverified. KOMIPO’s official Credit Ratings page shows international ratings of AA Stable from S&P, Aa2 Stable from Moody’s, and AA- Stable from Fitch. KOMIPO’s official IR information confirms a Moody’s Aa2 Stable rating history in December 2025 and S&P AA Stable in October 2025. The FY2025 DART annual report also shows Moody’s Aa2 and S&P AA for foreign-currency bonds.

Domestic ratings are also at the highest level. In KOMIPO’s FY2025 DART annual report, NICE Investors Service, Korea Investors Service, and Korea Ratings rated won-denominated corporate bonds AAA in June 2025, while short-term bonds and commercial paper were rated A1. Regular A1 assessments for short-term bonds and commercial paper can also be confirmed in December 2025. KOMIPO’s official page also shows domestic AAA Stable ratings.

Two points matter when interpreting the ratings. First, KOMIPO’s international ratings are close to the Korean sovereign and KEPCO group credit levels and cannot be explained by looking only at the company’s standalone operating margins or cash. Second, domestic AAA and high international ratings support market access, but they are separate from the guarantee provisions of individual bonds. The official rating indications are confirmed, but rating-agency support notching and standalone credit assessments are unverified. Rating-agency incorporation of support and investors having a legal guarantee are not the same thing.

As of the date of this report, the latest full Moody’s, S&P and Fitch reports have not been obtained. Therefore, rating-agency-specific downgrade and upgrade triggers, support notching from standalone credit strength, linkage with KEPCO, and the constraining relationship with the Korean sovereign remain unverified. This report uses rating levels confirmed on official pages and DART, and does not make definitive statements about the detailed qualitative language used by rating agencies.

Future downward rating pressure could arise not only from deterioration in KOMIPO’s standalone performance, but also from a combination of weaker KEPCO credit strength, doubts about the Korean government’s support stance, insufficient recovery in the electricity tariff framework, weaker short-term market access, and financial deterioration from capital investment. Conversely, even if standalone financials improve, rating upside is likely to be constrained by the already high rating level, the Korean sovereign, KEPCO, and rating agencies’ assessment of government-related issuers.

8. Credit Positioning

KOMIPO is best positioned as a generation subsidiary within the KEPCO group among Korean quasi-sovereigns. KEPCO itself is central to transmission, distribution and retail tariffs, so its policy weight and legal context differ from those of KOMIPO. Korea Hydro & Nuclear Power is nuclear-focused and has different fuel-cost and carbon-cost risks, while KOMIPO is centred on thermal and LNG generation and is more exposed to fuel prices, environmental investment and replacement of ageing thermal assets.

KOMIPO falls into a similar credit category to non-nuclear generation subsidiaries such as Korea East-West Power. Differences arise from generation-asset composition, coal and LNG mix, sales volume, investment plans, short-term debt, and the progress of overseas and renewable-energy businesses. KOMIPO is large, with 10,782MW of capacity in 2025, and its 1Q2026 sales share was also high at 7.7%. At the same time, current financial liabilities and generation-transition investments need continued monitoring.

Compared with policy financial institutions such as KDB and KEXIM, KOMIPO has government-policy importance, but its role and legal framework as a financial policy institution are different. This report does not assess market pricing or relative value. Live spreads, OAS, CDS, and same-tenor comparisons with KEPCO, KDB, KEXIM, KHNP and EWP are unverified. The report organises only credit positioning, not investment attractiveness.

9. Key Credit Strengths and Constraints

KOMIPO’s credit strengths can be summarised as full KEPCO ownership, importance to Korea’s electricity supply, institutional sales, high ratings and market access, and continued profitability. End-2025 capacity of 10,782MW, sales volume of 36,468GWh, 2025 consolidated net income of KRW179.8bn, and operating cash flow of KRW1,023.0bn show that the company is a generation subsidiary with a certain repayment base within the institutional framework. However, KEPCO ownership and high ratings are not explicit guarantees, and support expectations should be separated from legal claims.

Constraints include the thermal-heavy generation mix, investment burdens including replacement of ageing thermal assets, short-term financial liabilities, and unverified legal protection under individual bonds. Coal and LNG are affected by fuel prices, FX, emissions allowances and environmental regulation, while Boryeong New Combined Cycle, Haman Combined Cycle, Yongin, Jeju LNG, and the Gurye and Bonghwa pumped-storage projects create medium-term funding needs. At end-March 2026, current financial liabilities were KRW2,106.2bn, and cash plus current financial assets were well below this amount, meaning the company operates on the basis of high-rated market access.

10. Downside Scenarios and Monitoring Triggers

The largest downside scenario for KOMIPO would be a simultaneous deterioration in standalone financials and market access despite institutional sales and support expectations. For example, if renewed increases in LNG and coal prices, won depreciation, adverse movements in SMP or settlement rules, delayed recovery in KEPCO tariffs, equipment failures, emissions allowance costs and higher investment costs occur together, operating profit and operating cash flow would come under pressure. If the refinancing cost of short-term financial liabilities rose under those conditions, the company’s dependence on support expectations would increase rapidly.

Monitoring items include margins, operating cash flow and investment burden, short-term financial liabilities and maturity dispersion, perceptions of KEPCO and the Korean sovereign, and contractual terms of individual bonds. It is necessary to monitor how fuel costs, FX, sales volume, SMP, settlement adjustment factors and capacity payments move from 2Q2026 onward, and how far investments in Boryeong New Combined Cycle, Haman Combined Cycle, Yongin, Jeju and pumped storage can be absorbed by internal funds. For investment decisions in specific issues, currency, maturity, guarantee, ranking, security, negative pledge, cross-default, tax and governing law need to be confirmed in issuance documents.

11. Credit View and Monitoring Focus

KOMIPO is a Korean government-related generation company that is naturally analysed on a support-inclusive basis given its official rating levels and issuer attributes. It is not an issuer whose credit level can be explained by standalone financials alone. Current credit strength is strongly supported by full KEPCO ownership, importance to Korea’s electricity supply, sales to KEPCO through KPX, high domestic and international ratings, and market funding capacity. The credit direction is likely to remain broadly stable in the near term, but margins, capital and short-term financial liabilities showed weakness from 2025 to 1Q2026, so the standalone financial trend is not a simple story of improvement. A rapid change in credit strength is not highly likely, but spreads and rating outlooks could move more readily if views on KEPCO or the Korean sovereign, bond-market access, and fuel, FX and investment burdens deteriorate simultaneously.

In this report’s credit assessment, KOMIPO is treated as clearly stronger than a private generation company. This is because it is a wholly owned KEPCO subsidiary, supports Korea’s electricity supply through around 10.8GW of generation capacity, sells electricity institutionally to KEPCO, and maintains domestic AAA/A1 and high international ratings. Normal-course refinancing capacity and market access are considered strong, and support expectations are substantial. However, the specific level of support, standalone credit strength, and rating triggers are unverified because full rating agency reports have not been obtained.

At the same time, it is not appropriate to treat KOMIPO in the same way as Korean government-guaranteed debt. This report has not confirmed explicit guarantees for individual bonds, and investors’ legal claims are governed by issuance documents. Support expectations are a major credit support, but the debt instruments that the government or KEPCO would support, and in what form, are not automatically determined by contract. Understanding the reason for the high ratings requires separating support expectations from legal guarantees.

On a standalone financial basis, 2025 operating profit of KRW307.1bn, net income of KRW179.8bn, and operating cash flow of KRW1,023.0bn are reassuring. However, revenue declined sharply and operating profit fell from 2024. In 1Q2026, operating profit declined despite modest revenue growth, while total liabilities and current financial liabilities increased. Cash and current financial assets alone do not sufficiently cover short-term financial liabilities, so liquidity depends on high-rated market access. This is acceptable at present, but requires monitoring.

The central medium-term issue is how KOMIPO absorbs generation-transition investment. Boryeong New Combined Cycle, Haman Combined Cycle, the Yongin Integrated Energy Project, Jeju LNG, and the Gurye and Bonghwa pumped-storage projects are necessary investments for stable supply and decarbonisation policy. However, they increase short- to medium-term funding needs and raise reliance on borrowings and bonds in years when operating cash flow is weak. The time lag before these investments improve the earnings base is a credit monitoring point.

Therefore, for KOMIPO, the base case should be support-inclusive strength, while standalone financials, short-term debt, investment burden and individual bond terms should be continuously monitored. In particular, operating margins, operating cash flow, investing cash flow, current financial liabilities, issuance-market access, KEPCO’s tariff and financial environment, and linkage with Korea’s sovereign rating should be tracked from 2Q2026 onward. For investment decisions in specific bonds, even under the same KOMIPO name, guarantee, ranking, currency, maturity, covenants and governing law must be confirmed in the issuance documents.

12. Short Summary & Conclusion

Korea Midland Power is a major Korean generation subsidiary wholly owned by KEPCO and a government-related issuer supported by sales to KEPCO through KPX, around 10.8GW of generation capacity, domestic AAA/A1 ratings, and high international ratings. Credit strength is naturally read as support-inclusive based on the official rating levels and issuer attributes, but the issuer cannot be explained by standalone financials alone, given lower margins, higher short-term financial liabilities, and generation-transition investment burdens visible from 2025 to 1Q2026. For investment decisions, government and KEPCO support expectations should be separated from explicit guarantees on individual bonds, and liquidity, refinancing, generation-transition investment, and KEPCO’s tariff and financial environment should be monitored continuously.

13. Sources

• Korea Midland Power Co., Ltd., official English overview page, accessed 2026-05-22: https://www.komipo.co.kr/eng/content/186/main.do?mnCd=EN010101
• Korea Midland Power Co., Ltd., official Financial Statements page, accessed 2026-05-22: https://www.komipo.co.kr/eng/board/BRD_000072/boardMain.do?mnCd=EN030101
• Korea Midland Power Co., Ltd., official Credit Ratings page, accessed 2026-05-22: https://www.komipo.co.kr/fr/content/238/main.do?mnCd=EN030102
• Korea Midland Power Co., Ltd., official IR Information page, accessed 2026-05-22: https://www.komipo.co.kr/eng/content/244/main.do?mnCd=EN030201
• Korea Midland Power Co., Ltd., official Debt Repayment Plan page, accessed 2026-05-22: https://www.komipo.co.kr/eng/content/242/main.do?mnCd=EN030104
• DART, Korea Midland Power Co., Ltd. FY2025 annual report, filed 2026-03-31, rcpNo=20260331003093, accessed 2026-05-22: https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20260331003093
• DART, Korea Midland Power Co., Ltd. 1Q2026 quarterly report, filed 2026-05-15, rcpNo=20260515001027, accessed 2026-05-22: https://dart.fss.or.kr/dsaf001/main.do?rcpNo=20260515001027

14. Unverified / Pending

• The latest full Moody’s, S&P and Fitch reports have not been obtained. Details on support incorporation, standalone credit strength, and downgrade / upgrade triggers are unverified.
• Government guarantee, KEPCO guarantee, ranking, security, negative pledge, cross-default, change of control, tax, and governing law for individual bonds are unverified issue by issue.
• Live spreads, bond prices, OAS, CDS, and same-tenor relative value versus KEPCO, Korea Hydro & Nuclear Power, Korea East-West Power, KDB and KEXIM are unverified.
• The latest 2026 maturity ladder, undrawn committed lines, bank facilities, and details of CP / short-term bond balances are unverified.
• Detailed breakdowns of revenue and profit by power plant, generation volume by fuel, fuel costs, SMP, capacity payments, settlement adjustment factors, and emissions allowance costs have not been obtained.
• Investment amounts, funding sources, contract terms, and recovery mechanisms for the Yongin Integrated Energy Project, Jeju LNG, and the Gurye and Bonghwa pumped-storage projects require additional verification.