[Click eStock] "S-Oil, Q4 Operating Profit Expected to Turn Positive... Target Price Up 33%"

[Asia Economy Reporter Jihwan Park] On the 14th, Eugene Investment & Securities maintained a 'Buy' rating on S-Oil, citing the impact of rising oil prices and recovery in the chemical market, and raised the target price by 32.8% from the previous 64,000 KRW to 85,000 KRW.

Researcher Seonghyun Hwang of Eugene Investment & Securities stated, "Q4 sales are expected to be 4.6 trillion KRW, and operating profit 156 billion KRW, representing a 17.1% increase and a return to profitability compared to the previous quarter." Although the recovery in the refining industry is slow, the rise in oil prices compensates for this, and significantly improved performance compared to the previous year is expected.

Since the outbreak of the novel coronavirus disease (COVID-19), demand for petroleum products has gradually recovered, but refining margins are still low. The complex refining margin is $2.1 per barrel, similar to the previous quarter, and considering the rebound in OSP, real margin improvement is limited. Researcher Hwang explained, "Due to the steadily rising international oil prices, inventory valuation gains are being reflected, and the deficit is expected to narrow."

He added, "The target price increase reflects the results of the OPEC meeting, which led to upward revisions of international oil price forecasts and this year's performance," and predicted, "Expectations for market recovery in the second half are reflected, and the current level of stock price is expected to maintain a strong stable trend."