The utility industry is an industry that produces goods with the characteristics of public goods, such as electricity, water, and gas, which are essential for everyday life.
The utility industry is a typical defense industry and belongs to the required public goods category, and its economic sensitivity is relatively low. In the case of Korea, KEPCO and KOGAS have an exclusive supply status, which is a monopoly market in which the tariff is determined by the government. The utility industry, which is determined by the government, is affected by various government policies.
The utility industry is affected by exchange rates, oil prices and policy rate hikes.
Electric utilities depend on imports of raw materials in full, and are affected by exchange rate fluctuations. The gas company reflects the interlocking price of the cost due to the exchange rate to the selling price. However, city gas is not affected by exchange rates.
In the case of electric power companies, since raw materials are imported in full quantity, profitability will deteriorate in the short term if crude oil price rises. The gas company does not affect the profitability of the company by changing the price of raw materials. In this case, however, the purpose of the public service, such as the stable supply of natural gas, may become difficult to achieve.
If policy rates are raised, operating profit may increase even if sales decrease. However, rising international commodity prices with less cost hikes may undermine profitability.
Representative stocks in the UtilitiesㆍTelecommunication industry(KOSPI/KOSDAQ)
- 한국전력, LG유플러스, 한전KPS, KT, SK텔레콤, etc.