Korea Midland Power Co. Ltd.

The stable outlook on KOMIPO reflects the outlook on KEPCO, given that the rating on KOMIPO is based on the company's core subsidiary status to KEPCO group. The buffer on KOMIPO's 'bbb-' SACP is limited due to the company's weakened profitability and growing debt. However, the rating remains equalized to that on the parent. We may lower the rating on KOMIPO if we lower the rating on KEPCO. We would downgrade KEPCO if we lower the sovereign credit rating on Korea. A weakening of KEPCO's role as a policy arm of, or its link to, the government could also lead to a downgrade. We may also lower our rating on KOMIPO if the company's relationship with KEPCO weakens significantly, potentially

...We equalize the ratings on Korea Midland Power Co. Ltd. (KOMIPO) with that on its parent Korea Electric Power Corp. (KEPCO; ##/Stable/A-1+). We expect KOMIPO to remain as a core subsidiary of KEPCO given the integral nature of power generation in KEPCO's role of providing a stable supply of electricity to the country. KOMIPO accounts for around 8% of the nation's total power generation volume. We equalize the ratings on KEPCO with that on the government of South Korea (##/Stable/A-1+) due to its special public status of implementing the government's electricity policy. KOMIPO's earnings to grow towards 2021, from very weak level in 2017-2018, on new capacity additions. This mainly tracks the company's generation capacity transition. The government has been taking several measures to expand environmentally friendly power generation in Korea. The company's performance has been under negative pressure due to the government's operational restrictions on coal-based plants and earlier closure...

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