Refined Margin Surge and Dividend Expansion Potential... Favorable Investment in S-Oil

[Asia Economy Reporter Hwang Yoon-joo] Analysis suggests that S-Oil's investment appeal remains strong in the second quarter of this year, with refining margins continuing to rise.

On the 1st, Lee Dong-wook, a researcher at Kiwoom Securities, stated, "The refining margin, a key variable in S-Oil's performance, continues to be exceptionally strong," adding, "The average Singapore complex refining margin on a spot basis in Q2 rose by more than $15 per barrel compared to the previous quarter."

Lee explained, "This is due to the tightening supply and demand of petroleum products triggered by COVID-19 and the increasing penetration of EVs, along with reduced petroleum product exports from China and Russia, and strong demand for diesel, gas oil, and gasoline, creating favorable conditions."

Meanwhile, due to the tight diesel supply situation, the weekly middle distillate inventory in the U.S. has fallen to its lowest level since mid-2008.

Lee also assessed that S-Oil's shareholder-friendly policies are advantageous for investment.

He analyzed, "Despite a decrease in inventory valuation gains since Q2 this year and limited capacity expansion, considering the improved demand outlook for diesel and gasoline and the gradual demand improvement expected for jet fuel through next year, strong performance is likely to continue this year and next."

He further evaluated, "Given S-Oil's existing dividend payout guidance and the Capex for the Shahin project to be implemented in the medium term, there is a high possibility of an increase in dividend size this year."

He emphasized, "In the current uncertain macroeconomic environment, attention to high-dividend stocks like S-Oil appears necessary."

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