Korea Electric Power Corp Q3 2019 Earnings Call (English, Korean) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Anna Park - Macquarie Research - Analyst : [Interpreted] I don't know whether this question is appropriate or not, but if you can comment on it, it will be highly appreciated. My first question is on LNG. When you look at the commodity price of LNG on an annual average basis, what would that be? And what is a proportion of long-term contracted amount out of this purchase? And if you can, can you please share Q3 numbers as well?

Question: Jiyoon Shin - KTB Investment & Securities Co., Ltd., Research Division - Analyst : [Interpreted] I have 2 questions. The first question is on coal. And on coal price, it seems that the spot price has been going down. And if you look at Q3's coal unit price for KEPCO, it has also gone down despite the tax increase in Q2. So do you foresee that this trend will continue on to Q4 and carry out throughout the next year? Can we continue to expect that the coal price will -- coal unit price will continue to be lower than as it is? It will be great if you can share guidance. And I would assume that would be rather difficult, but if you can some -- share some perspective, that would be great. Second question is also on cost. If you look at the REC trading at spot price, the price is actually going down and it's as low as KRW 50,000 and even moving closer to KRW 40,000. But REC is definitely a purchase cost for KEPCO. And what is the impact of REC purchasing cost? And is there any time lag? And what is the impact from time lag? And how do you foresee this going forward. Unidentified Company Representative [Interpreted] To answer your first question, as you know, that the spot price of coal has been gone down and creating favorable environment for us. Even according to our internal data, the unit price of coal for Q3 has gone down. An annual number per ton would be KRW 133,100 per ton. And given the increase of individual consumption tax effect, which would be about KRW 10,000 increase in overall coal price, and if you multiply it by that -- multiply that by 9 months, which will be reflected by this increase of consumption tax, divide it by 12 months, they will have about a minus KRW 70,500 effect -- I'm sorry, plus incremental [KRW 7,500] effect on the overall coal price. So that will bring us to an annual coal price of KRW 125,600 per ton. If you compare that to the last year's coal price, which was KRW 132,400, it's actually lower than that number. And given the fact that there is about 5 months lagging impact from this spot price to KEPCO's number, we believe the current spot price will be reflected in Q1 of this year. So until Q1, we believe that we will be able to enjoy this positive coal price. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. NOVEMBER 13, 2019 / 7:00AM, 015760.KS - Q3 2019 Korea Electric Power Corp Earnings Call (English, Korean) Unidentified Company Representative [Interpreted] Just to add to that point, if you look at the Australian outright coal price, the Q4 average number that was predicted by Bloomberg was $115. But if you look at the actual Q4 number, it is now being put forth at $74. So when you look at the Q4 spot price, it's going down as far as 30% to 40%. And to answer your second question on REC cost or RPS impact, in Q4, if you look at the REC cost itself, it's at par with year-on-year number, but REC price or unit price has gone down over time. And if you consider the fact that RPC mandatory reflection will go up by 1% per year, although the unit price might go down, it will either hold at some point or the unit price would go up continuously in the future because there will be some limitation in dropping the REC cost.