[Click e Stocks] S-Oil Target Price Raised to 130,000 Won

[Asia Economy Reporter Junho Hwang] Kiwoom Securities has raised the target price of S-Oil from 120,000 KRW to 130,000 KRW. This adjustment is based on the analysis that earnings are expected to surpass the golden age period of refining-related stocks.

Kiwoom Securities has projected S-Oil's operating profit for this year at 1.8922 trillion KRW.

First, domestic and international competing refining facilities are scheduled for regular maintenance. S-Oil will not have any plant shutdowns this year, so the volume reduction effect is expected to be limited. 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 as the year progresses. Additionally, aromatic products such as PX and benzene, which recorded weak spreads last year, are expected to see a clear margin recovery this year compared to last year due to increased downstream supply capacity. Lubricant base oils are also estimated to maintain solid profitability, with net regional volume increase of 800,000 tons this year, which is only 25% compared to the year before last.

Furthermore, S-Oil's petrochemical division is expected to see annual operating profit of 413.9 billion KRW this year, a 127.4% increase compared to last year, due to China's PX non-integrated TPA and benzene non-integration.

Dongwook Lee, a researcher at Kiwoom Securities Research Center, explained, "Especially in the fourth quarter of this year, demand and inventory for most petroleum products except jet fuel are likely to return to pre-COVID-19 levels," adding, "Considering the earnings improvement, we are raising the target price from the previous 120,000 KRW to 130,000 KRW."

This content was produced with the assistance of AI translation services.