[Click eStock] "S-oil, Earnings Forecast Downgraded... Target Price ↓"

NH Investment & Securities evaluated on the 2nd that S-Oil reflects weak oil prices and refining margins, lowering its earnings forecast. Accordingly, it maintained a 'Buy' investment rating but lowered the target price to 74,000 KRW.

Choi Young-kwang, a researcher at NH Investment & Securities, stated, "We expected a rebound in refining margins during the Q3 driving season, but due to weak demand, the Singapore refining margin failed to show a significant rebound. While the crude oil import price (OSP) rose, oil prices fell, resulting in a significant lagging effect and inventory valuation losses."

Researcher Choi analyzed, "Q3 is expected to record an operating loss of 211.3 billion KRW, turning to a loss compared to the previous quarter and significantly missing market consensus. The refining segment is expected to record an operating loss of 428.7 billion KRW due to inventory valuation losses (197.1 billion KRW) and negative lagging effects."

He added, "From Q4, the cost burden eased due to the decline in OSP. We expect profits to rebound again as the negative lagging effect disappears."

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