J.P. Morgan South Korea FTM 9 Jun 26 KEPCO; Korea Chemicals; Memory Market Update and More

Research evidence excerpt

J.P. Morgan South Korea FTM 9 Jun 26 KEPCO; Korea Chemicals; Memory Market Update and More

Asia Pacific Equity Research

South Korea First to Market 09 June 2026

Top Stories

| KEPCO (Sonny Lee) (015760 KS, UW)

Macro backdrop turning more unfavorable; downgrade to Underweight

The macro backdrop is worsening for KEPCO: the KRW continues to weaken, commodity estimates are being revised up, and

the interest rate hike cycle may come sooner as the Bank of Korea (BOK) has shown a more hawkish stance than anticipated.

A muddled slowdown is the worst-case setup: input costs remain elevated but not enough to force policy support, while the

likelihood of electricity tariff hikes looks low as policy rhetoric turns adverse, capping ASP upside and earnings recovery. We cut

2026-28E OP by 22-48%, lower our Dec-26 PT to W28,000 based on a mid-cycle P/B multiple of 0.35x (vs previously up-cycle

P/B of 0.54x), and downgrade KEPCO to Underweight.

Korea Chemicals (Parsley Ong)

May NBL/SBR margins surge to five-year highs as naphtha/LPG shortage triggers rubber tightness

According to Korea Customs data, Korea NBL prices increased by 3.4% m/m to $1,633/t in May, and the Apr-May average

price of $1,606/t is the highest in five years. This is attributable to: 1) naphtha supply shortage post the Middle East war – we

forecast a >20% q/q decline in 2Q26 NBL volumes for Kumho, and 2) improved demand for Malaysian medical gloves due to

US restocking. We estimate that NBL margins have expanded to $916/t – exceeding SBR for the first time since 2022 and the

highest since 2021. Key beneficiaries include Kumho Petchem and LG Chem, for which we forecast 2Q chems OP to

increase q/q despite lower volumes. Our APAC top pick remains Nan Ya Plastics.

Memory Market Update (Jay Kwon)