Korea Investment & Securities forecasted on the 16th that the sluggish market condition for S-Oil will continue due to falling oil prices and refining margins. Consequently, it adjusted the target stock price down from 90,000 won by 17% to 75,000 won. However, it maintained the investment opinion of "buy", noting that oil prices could rebound after hitting the bottom. The previous day's closing price for S-Oil was 51,800 won.
Choe Woo-n, a researcher at Korea Investment & Securities, said, "The operating losses in the refining sector will widen due to falling oil prices and refining margins. Global economic slowdown due to the tariff hike in the United States will also delay the recovery of demand in the (currently unprofitable) petrochemical sector."
Korea Investment & Securities estimates that the operating profit for the first quarter of this year will be 54 billion won, a 76% decrease from the previous quarter, which will fall short of market expectations. By institutional sector, the refining and chemical sectors are expected to record operating losses of 38.6 billion won and 32.8 billion won, respectively.
On the same day, Hyundai Motor Securities also adjusted its target stock price down from the existing 75,000 won to 57,000 won. It lowered its investment opinion from "buy" to "neutral (M.PERFORM)," adjusting its expectations.
Kang Dong-jin, a researcher at Hyundai Motor Securities, stated, "Given the sluggish situation in the major business of the refining industry, there is little room for stock price increases in the short term. It is necessary to confirm stable operation and profitability of the Shahin project (a project to establish facilities for producing high-value-added petrochemical products)."
However, there are also analyses suggesting that a rebound in oil prices is expected in the future. Researcher Choe noted, "If oil prices rebound after hitting the bottom in the second quarter, the investment appeal as a pure refining company could increase," adding, "The refining sector is not in a situation where it needs to worry about a structural long-term recession like the chemical sector."