[Click eStock] "S-Oil to Exceed 2Q Operating Profit Forecast by 80%... Target Price Up"

[Asia Economy Reporter Myunghwan Lee] Kiwoom Securities announced on the 21st that it maintains a buy rating on S-OIL and raises the target price by 7.1% from the previous 140,000 KRW to 150,000 KRW. This is because the company is expected to post an operating profit in the second quarter of this year that exceeds market expectations by more than 80%.

Kiwoom Securities forecasted that S-OIL's operating profit for the second quarter of this year will be 1.5 trillion KRW, a 12.6% increase compared to the previous quarter. This figure surpasses the market expectation of 825.2 billion KRW by 81.8%. It is expected to record an earnings surprise due to improved performance across all business sectors.

Looking at each business sector, the refining segment's operating profit is expected to increase by 1.8% from the previous quarter to 1.2221 trillion KRW. This is due to difficulties in the supply and demand of petroleum products caused by a decrease in exports of petroleum products from China and Russia, as well as refinery shutdowns, despite a decline in inventory valuation gains.

The petrochemical segment's operating profit is expected to turn positive to 77.4 billion KRW compared to the previous quarter. Although the olefin sector, including polypropylene (PP) and propylene oxide (PO), recorded poor performance, benzene and paraxylene (PX) recently improved due to the supply shortage of petroleum products, which provided a reflective benefit.

The lubricants base oil segment's operating profit is projected to increase by 1.7% from the previous quarter to 200.5 billion KRW. Despite an increase in refinery operating rates, the supply increase of lubricants base oil was limited due to the petroleum product supply shortage, and bunker C oil prices declined.

Kiwoom Securities expects S-OIL to continue solid performance in the second half of this year. Although the company has achieved significant performance improvements this year, market concerns have limited the stock price rise. Researcher Dongwook Lee of Kiwoom Securities stated, "Due to the postponement of planned new capacity expansions, regulations, further reductions in operating rates of Russian refineries caused by declines in naphtha/bunker C oil cracks, and reduced operating rates in the third quarter due to product switching at refineries, the company is expected to sustain outstanding performance compared to last year in the second half of this year."

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