[Click eStock] "S-Oil Expected to Continue Earnings Surprise in Q2"

[Asia Economy Reporter Song Hwajeong] Samsung Securities forecasted on the 9th that S-Oil will continue to deliver earnings surprises in the second quarter of this year and raised the target stock price from 120,000 KRW to 128,000 KRW. The investment opinion was maintained as 'Buy.'

Hyunryeol Cho, a researcher at Samsung Securities, explained, "S-Oil's operating profit in the second quarter is expected to be 526.5 billion KRW, a 16% decrease from the previous quarter but significantly exceeding the market forecast of 390.6 billion KRW. This is due to the upward revision of refining profits following the rise in oil prices and the continued strong profitability of the chemical and lubricant base oil segments."

The operating profit in the refining sector is expected to be 182.6 billion KRW, a 47% decrease from the previous quarter. Researcher Cho said, "Although inventory valuation gains and losses will decrease compared to the previous quarter, we have revised upward from the previous estimate due to the recent rise in oil prices over the past month. The 1-month lagging refining margin is expected to slightly decrease compared to the previous quarter due to a reduction in the lagging effect (time lag in raw material input), but the spot refining margin is improving further, which is positive."

In petrochemicals, operating profit is expected to increase by 25% from the previous quarter to 122.9 billion KRW in the second quarter, driven by the simultaneous improvement of olefins and aromatics. Operating profit from lubricant base oil is expected to rise 17% to 221.1 billion KRW, with tighter supply due to the global refining facility utilization rate decline and weaker raw material prices leading to further spread improvement.

Besides oil prices, the upward momentum remains intact. Researcher Cho stated, "Although international oil prices surged rapidly ahead of the recovery in refining demand, the margin recovery for domestic refiners' main products, such as diesel and kerosene, has yet to occur. This is expected to gradually recover in the second half of this year with the resumption of international passenger demand, meaning there is still upward momentum worth anticipating from a stock price perspective."

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