Which Stock Did Foreign Investors Focus on Buying Amid Continued Sel Korea?

by Kwon Jaehee

Published 24 Apr.2022 08:13(KST)

Which Stock Did Foreign Investors Focus on Buying Amid Continued Sel Korea?

[Asia Economy Reporter Kwon Jae-hee] Foreign investors, the major players in our stock market, continue to pursue a "Sell Korea" strategy, drawing attention to the stocks they have been actively buying. The main focus is S-OIL. This is because international oil prices have soared, and improved refining margins are expected to lead to strong earnings.

According to the Korea Exchange on the 24th, foreign investors have been heavily buying S-OIL on 19 out of 23 trading days during the past month (March 23 to April 23). During this period, the amount purchased by foreign investors reached 200.076 billion KRW. On the other hand, individual investors sold 218.474 billion KRW worth of shares.

The prolonged Ukraine crisis, which has driven up international oil prices, is interpreted as the factor leading foreign investors to focus on buying S-OIL. In particular, the recent sustained high oil prices have significantly improved refining margins. S-OIL's average refining margin in the first quarter rose by 29% compared to the previous quarter. The improvement in refining margins, a key indicator directly linked to the profits of refiners, is expected to greatly enhance S-OIL's first-quarter performance. Korea Investment & Securities estimates that S-OIL's first-quarter sales will reach 9.7 trillion KRW, with operating profit of 1.2342 trillion KRW. These figures represent increases of 82% and 96%, respectively, compared to the previous year.

Accordingly, securities firms have raised their target prices for S-OIL. Korea Investment & Securities raised its target price from 130,000 KRW to 140,000 KRW, while Samsung Securities raised its target price from 130,000 KRW to 137,000 KRW.

Kang Dong-jin, a researcher at Hyundai Motor Securities, analyzed, "The strength in fuel and oil prices is expected to continue for a considerable period, and it is highly likely that the strong oil prices and refining margins will persist at least until 2023 for S-OIL." He added, "Moreover, the recent improvement in aromatic product spreads also points to strong earnings prospects."