-- Korea Electric Power Corp. fell in Seoul trading after UBS AG reaffirmed its ``sell'' rating on the stock, saying South Korea's first power-tariff increase in more than a year may be below its forecast.

The generator of almost all the power used in the country dropped fell as much as 2.2 percent to 30,950 won, and traded at 31,100 won at 11:48 a.m. local time. The stock has fallen 21 percent this year compared with a 17 percent decline in the benchmark Kospi index.

The government may increase electricity prices by an average of 5 percent after fuel costs increased, Maeil Business Newspaper reported July 12. A decision will be made on July 17 and the changes will take effect next month, the Korean-language newspaper said.

``Tariff hike suggested in local press is not enough to offset fuel price increases,'' UBS analysts Josh J. Bae and Stephen Oldfield wrote in a report today. ``We expect Korea Electric to be loss-making in the coming years.''

UBS expects Korea Electric to post a 761 billion-won ($758 million) net loss in 2008 following a 1.47 trillion won profit last year. The utility in April posted a first-quarter operating loss of 219 billion won and net income of 300 billion won.

The analysts maintained their ``sell'' recommendation on the stock as well as their 12-month price target of 26,000 won. UBS, on May 28, cut its rating from ``neutral'' and lowered its share- price target from 30,000 won.

`Take Profits'

``Looking at the last two tariff hikes, the time of the tariff hikes appeared to provide an opportunity to take profits on'' Korea Electric ``shares as the tariff hikes were not enough to offset the cost increases,'' the two analysts wrote. ``We believe it may be a similar situation this time as well.''

The stock has gained 10 percent since March 18.

South Korea, where inflation has reached a 10-year high, has kept electricity rates unchanged since a 2.1 percent increase on Jan. 15, 2007. Prices were raised by an average 1.9 percent in December 2005, according to Han Sang Yeon, assistant director at electricity division at the Ministry of Knowledge Economy.

``We haven't decided whether to raise prices on July 17,'' Han said in a telephone interview today.