[Click eStock] "3Q Earnings May Improve but Mid-to-Long-Term Stagnation Expected... Target Price Up"

Kiwoom Securities evaluated S-Oil on the 31st, stating that while a performance improvement is expected in the third quarter, the results for 2024-2025 are likely to stagnate somewhat, describing it as a "valid zone for trading strategy from a trading perspective." Accordingly, they maintained the investment rating at 'Neutral (Marketperform)' and raised the target price to 74,000 KRW.

Shin Daehyun, a researcher at Kiwoom Securities, said, "In the third quarter, due to regional regular maintenance, low U.S. gasoline inventories, and the driving season, the refining margin in the third quarter is expected to be supported," adding, "The operating profit for the third quarter (estimated at 478 billion KRW) will show a noticeable short-term performance improvement."

Researcher Shin explained, "Among the product groups with a high production ratio currently, the Fuel Oil margin is improving compared to the first quarter, and last month, the margin for synthetic resins relative to raw materials has generally increased." This implies that a rise in oil prices due to additional production cuts by OPEC Plus (OPEC+) could enhance short-term investment attractiveness.

However, the mid-to-long-term outlook is negative. Researcher Shin forecasted, "With the increasing penetration rate of electric vehicles (EVs), demand for petroleum products as transportation fuel is expected to decline, and global refining capacity is projected to exceed demand in 2024-2025."

He pointed out, "This scale is about 1.7 million to 2 million barrels per day, which could limit S-Oil's dividend capacity, as the company plans to cover approximately 70% of the large-scale CAPEX for the Shahin project with internal funds."

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