[Click eStock] "S-Oil, Q2 Earnings Expected to Decline... Target Price Down"

NH Investment & Securities forecasted on the 19th that S-Oil's second-quarter earnings will fall significantly short of expectations. Accordingly, they maintained a 'Buy' investment rating but lowered the target price to 87,000 KRW.

Choi Young-kwang, a researcher at NH Investment & Securities, stated, "The second-quarter operating profit is expected to plunge 79.5% quarter-on-quarter to 93.2 billion KRW, significantly missing market expectations."

Researcher Choi explained, "Since February, refining margins have continued to decline, and due to negative lagging effects, the refining division is expected to record an operating loss of 110.7 billion KRW (operating margin -1.5%). The average Dubai crude oil price in the second quarter rose 5% compared to the first quarter average, but its trajectory has been declining since reaching a peak in April."

Researcher Choi evaluated, "S-Oil's stock price is trading at the lowest end of the PBR band, reflecting the weak short-term operating conditions." He added, "With the entry into the peak season for gasoline and diesel in the second half of the year, a rebound in refining margins is expected, making this a range where a low-price buying approach is possible."