Kiwoom Securities analyzed on the 28th that S-Oil's second-quarter performance fell short of market expectations, but it is expected to improve starting in the third quarter. It maintained a target price of 77,000 won and an investment opinion of 'buy.' The closing price of S-Oil on the previous trading day was 62,300 won.
S-Oil reported revenue of 8 trillion won in the second quarter, a 15.9% decrease compared to the previous year, and an operating loss of 344 billion won. This was due to temporary factors such as inventory valuation losses, the lagging effect (the phenomenon where the selling price of crude oil is lower than the price at the time of crude oil shipment), and the impact of a falling exchange rate.
Kiwoom Securities predicted that S-Oil would record an operating profit of 201.4 billion won in the third quarter, turning to black compared to the previous quarter. This is largely due to the elimination of the negative factors that occurred in the second quarter and the significant improvement effect from the spread due to stabilized lower oil prices.
Kim Do-hyun, a researcher at Kiwoom Securities, said, "Refining margins will be supported by tight supply," adding, "China's restructuring of refining facilities is ongoing, and recently, its intensity has also increased." If the restructuring continues, it will be difficult to increase the operating rate, which may also limit future exports.
Researcher Kim stated, "S-Oil is currently at a low price level," but noted, "Stabilized lower oil prices could lead to improved demand, and favorable supply and demand conditions are expected to continue through this year and into next year."