Kansai Electric Jumps as Court Paves Way for Restarts

Kansai Electric Power Co., Japan’s second-biggest utility, jumped after an appeals court overturned a ruling that barred the operation of two of its nuclear reactors, a win for the utility most dependent on atomic power before the Fukushima disaster.

Shares, which traded ex-dividend Wednesday, rose as much as 13 percent without accounting for the impact of a 25 yen payout and were at 1,417 yen as of 10:23 a.m. local time. It was the biggest gainer on the Nikkei 225.

The Osaka High Court removed an injunction in place since March 2016 preventing Kansai Electric from running the No. 3 and 4 nuclear reactors at its Takahama facility, the company said on Tuesday after trading ended. The decision is at least the third time a high court has ruled in favor of utilities seeking to restart reactors.

Kansai Electric has said that operating the units can boost its profits by 7 billion yen ($63 million) a month. The court decision is a plus for Kansai Electric’s credit strength, and the outlook for further restarts is positive for the creditworthiness of the electric utility sector, according to Hiroki Shibata, an analyst at S&P Global Ratings.

The company forecast a 6 percent decline in net profit for the year ending March 31 to 133 billion yen, it said Tuesday after the decision was announced. Sales are seen dropping 7.3 percent to 3 trillion yen and the company will make its first dividend payment in five years.

According to the average of 10 analysts surveyed by Bloomberg before the change in forecast, Kansai Electric was expected to post a profit of 107.4 billion yen. The new profit forecast and dividend is a positive surprise and will boost its stock in the short term, according to Syusaku Nishikawa, an analyst at Daiwa Securities Co.

Planned Maintenance

Before the Osaka-based company resumes operating the units, planned maintenance must be completed. The restart will take more than a month, NHK reported, citing the utility.

The decision is the first time a high court has overturned a ruling to favor nuclear restarts, according to Datsugenpatsu Bengodan, a group of lawyers who oppose nuclear power. The two previous high court victories were upholding district court decisions that had allowed reactors to operate.

Currently, three of Japan’s 42 operable reactors are online.

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