July 18, 2007 / 8:45 AM / 11 years ago

TEPCO shares dip but investors hope for a rebound

TOKYO, July 18 (Reuters) - Shares in Tokyo Electric Power Co. (9501.T) fell 4 percent on Wednesday, their biggest drop in five months, on concern the shutdown of the world’s biggest nuclear power plant after a strong earthquake could add to costs.

But some investors say the impact of Monday’s one-time natural disaster on the Japanese power monopoly’s overall business would be minimal, and that the stock price is likely to bounce back.

TEPCO, Asia’s largest power producer, has been ordered by regulators to keep its Kashiwazaki-Kariwa plant closed until its safety can be confirmed. The closure of the entire facility could cost TEPCO about 37-38 billion yen ($304-312 million) per month, according to analysts at Nomura Securities.

On Tuesday, Mizuho Securities cut its estimates for TEPCO’s operating profit by 10 percent to 520 billion yen for 2007/08, citing the impact of the plant shutdown.

That is below the company’s profit expectation of 530 billion yen, and the market consensus of 549.5 billion yen based on a poll of 12 analysts surveyed by Reuters Estimates.

But investors such as Mitsushige Akino, chief fund manager of Ichiyoshi Investment Management in Tokyo, expect TEPCO’s share price to rebound as economic growth remains stable and strong demand is expected going into the peak summer season.

"There are some unclear factors such as the total costs on repairs or inspections and the timeframe of the reactor shutdown," Akino said. "But the overall business environment for TEPCO is strong, so I think today’s decline is temporary, and possibly a strategic one for some investors."

TEPCO shares lost 4 percent to 3,600 yen, shedding 195 billion yen from its market value. The daily trading volume reached 13 million, more than triple the average over the past 30 days, according to Reuters data.

The company said late on Tuesday it had found some 50 problems at the Niigata plant following the earthquake, including radiation leaks.

TEPCO on Wednesday said it had underreported the amount of radiation in contaminated water that leaked into the ocean.

The 6.8 magnitude earthquake in northwestern Japan killed nine people, flattened hundreds of homes and sent more than 12,000 to evacuation centres.

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