We expect Korea Midland Power Co. Ltd. (KOMIPO) to remain a core subsidiary of Korea Electric Power Corp. (KEPCO; AA/Stable/A-1+), 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 10% of the nation's power generation volume. Meanwhile, we equalize the ratings on KEPCO with that on the government of South Korea (AA/Stable/A-1+) due to its special public status of implementing the government's electricity policy. We estimate the company's margins remained under pressure in 2018 due to unfavorable wholesale electricity prices, which were not fully adjusted to compensate for the high coal costs. However, we expect KOMIPO's profitability to gradually recover from 2019, largely tracking KEPCO's
