[Click eStock] S-Oil, Operating Profit to Increase by Over 2 Trillion This Year 'Target Price Up'

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities announced on the 10th that it maintains a 'Buy' rating on S-Oil and raises the target price by 14.3% from the previous 105,000 KRW to 120,000 KRW.

S-Oil's operating profit for the first quarter of this year is expected to reach 309 billion KRW, a 231.8% increase compared to the previous quarter, significantly exceeding market expectations (173.1 billion KRW). The annual operating profit for this year is forecasted to be 1.2657 trillion KRW, an increase of more than 2.3 trillion KRW compared to last year. While SK and GS are expected to conduct regular maintenance on CDU (total 570,000 B/D) from March to April this year, S-Oil will not have plant shutdowns this year, limiting the volume reduction effect. Despite the expansion of EV penetration, the closure and conversion of more than 2 million B/D of global refining facilities last year and this year are expected to improve refining supply and margins in the second half of the year. Aromatic products such as PX and benzene, which recorded poor spreads last year, are expected to show a clear margin recovery this year due to increased downstream supply capacity. Lubricant base oils are also estimated to maintain solid profitability, with a net increase in the region of only 800,000 tons this year, which is just 25% compared to two years ago.

Researchers Dongwook Lee and Junsu Kwon of Kiwoom Securities stated, "The hydrogen business is also expanding," adding, "To enter the high-growth hydrogen market, we are strengthening business cooperation with Aramco, investing in fuel cell companies, and expanding the installation of additional hydrogen charging stations."

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