Japan's Tohoku Electric Power Company's stock price recorded its biggest increase since 2013, leading the way for other Japanese utility companies.
Japan's Tohoku Electric Power Company's stock price recorded the biggest increase since 2013, leading other Japanese utility companies. The reason is that there are signs that the company's Miyagi Prefecture Onagawa Nuclear Power Plant Unit 2 is expected to restart around September.
The Tohoku Electric Power Company said it has completed the safety construction work required for the Miyagi Prefecture nuclear reactor. Affected by the news, the company's stock price rose 12% in Tokyo, and by the close, it had risen 10.76% to 1,544 yen. The company had planned to complete this mission in June.
Mizuho raised Tohoku Electric Power Company's rating from “neutral” to “buy,” and the target price was raised from 1,000 yen to 1,700 yen because the nuclear reactor is about to be restarted, and medium-term profitability is expected to improve.
Mizuho analysts, including Norimasa Shinya, said electricity demand in eastern Japan is expected to increase, which could provide growth opportunities for Tohoku Electric Power Company. Analysts also raised the target prices of Kansai Electric Power Company and Shikoku Electric Power Company, boosting the two companies' stock prices by at least 5%.
Bloomberg Intelligence analyst Kelvin Ng said, “Given that the unit production cost of nuclear power in Japan is 19% cheaper than coal-fired energy and 27% cheaper than liquefied natural gas energy, increasing nuclear power development may increase the profit margins of power companies.”
Nippon Electric Power shares have risen about 32% this year, outperforming the Tokyo Stock Exchange Index, thanks to Japan's plans to speed up the restart of nuclear reactors and expectations that Japan's growing role in the semiconductor ecosystem will boost demand.
Japan's electric power stocks performed well
Mizuho raised the target price of Shikoku Electric Power from 1,160 yen to 1,600 yen, saying that judging from the net market ratio, the stock price of Shikoku Electric Power is still attractive, and the company has stable free cash flow and a relatively healthy financial situation. Mizuho also raised Kansai Electric Power's target share price from 2,400 yen to 2,900 yen. Mizuho said Kansai Electric Power's seven operating nuclear reactors can generate “considerable cash flow.”