[Click eStock] "S-Oil, Strong Fundamentals to Continue"

On the 28th, IBK Investment & Securities maintained its buy rating and target price of 105,000 KRW for S-Oil, based on the judgment that solid earnings will continue.

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S-Oil's operating profit in the first quarter was 515.7 billion KRW, turning positive from the previous quarter and meeting market expectations. Dongwook Lee, a researcher at IBK Investment & Securities, analyzed, "This is because inventory-related losses decreased by 310.4 billion KRW compared to the previous quarter, and the petrochemical and lubricant sectors recorded solid performance."

The refining segment's operating profit was 290.6 billion KRW, turning positive from the previous quarter. Despite the slowdown in gasoline and diesel cracks after the peak season, the gasoline spread remained high due to the extended unplanned shutdowns in the US, and the official selling price (OSP) of Middle Eastern crude oil to Asia declined compared to the previous quarter.

The chemical segment's operating profit was 29.3 billion KRW, turning positive from the previous quarter. The olefin market remained similar to the previous quarter due to expanded regional maintenance, and PX spreads continued to be firm thanks to increased PET operating rates in China and improved gasoline cracks.

The lubricant segment's operating profit was 195.8 billion KRW, down 30% from the previous quarter. It was affected by price and sales volume declines due to the off-season. However, it recorded a high operating margin of 25.7% amid solid fundamentals.

The company's new growth engine, the Shahin project, has been progressing as planned since January this year. It is currently in the EPC and site construction stages, and after commercialization in the second half of 2026, margin increases of more than 4.5 USD per barrel are expected through integration of low-value streams and crude oil and maximization of chemical product yields.

In the second and third quarters of this year, gasoline demand is expected to increase with the arrival of the driving season. The EU's ban on imports of Russian petroleum products may limit gasoline production in Europe due to supply disruptions of raw materials needed for product manufacturing, which is also expected to tighten gasoline supply and demand. Researcher Dongwook Lee said, "Due to the strength of gasoline, additional spread improvements in BTX are also expected."

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