SEOUL (AFX-ASIA) – Shares of Korea Electric Power Corp (KEPCO) have been trading higher after the company announced stronger-than-expected net profit for 2002, dealers said.

Earlier, the company said that its net profit rose to 3.1 trillion won in 2002 from 1.8 trillion a year earlier on the back of higher sales, forex-related gains, lower interest payments and gains from the disposal of its Powercomm shareholdings. (US$1=1,200 won).

Sales rose to 21 trillion won in 2002 from 19.8 trillion a year ago as electricity consumption saw a 8% year-on-year growth.

Operating profit, however, fell to 1.88 trillion won from 1.96 trillion a year earlier, while recurring profit increased to 4.3 trillion from 2.5 trillion.

The company declared a dividend of 800 won per share for 2002.

“The 2002 net profit, a record high, beats market expectations and the company guidance of 2.9 trillion won,” Daehan Investment Trust & Securities industry analyst Lee Chul-Ho said.

He noted that the unusually strong net profit was mainly boosted by one-time items, pointing to a decrease in the operating profit base.

“I won’t revise up my current ‘buy’ rating on the stock as it is unlikely to continue the earnings momentum seen in 2002 unless it sells its power generation units,” he said.

He also noted that given the growing concerns over inflation pressure, a utility rate hike is not likely in the near future.

Rising oil prices are also pressuring its operations, with oil taking up about 20% of its cost structure, he added.

Despite such limitations, the stock will likely continue to attract long-term and risk-averse investors, he said.

“Its sales and earnings outlook is pretty strong and the company is increasingly concerned about shareholder value,” he added.

He forecasts about 8% rise in electricity consumption this year if the local economy makes a full-fledged recovery in the second half.

He also noted that the company has recently announced that it will increase dividend over time, triggering strong foreign investor interest.