[Market Focus] Has S-Oil Hit Rock Bottom?... Shares Rise Over 7%

S-Oil's stock price is on the rise, following securities firms' analyses that its current valuation (stock price relative to corporate value) is at a historic low.

As of 9:13 a.m. on May 27, S-Oil was trading at 57,400 won, up 3,800 won (7.09%) from the previous trading day. At the same time, S-Oil Preferred was trading at 37,400 won, up 1,750 won (4.91%).

On May 27, Hana Securities stated regarding S-Oil, "The stock price has reached the bottom range in its five-year cyclical pattern. The current level represents the low point for oil prices." The firm maintained its "Buy" investment rating and a target price of 80,000 won.

Yoon Jaesung, a researcher at Hana Securities, explained, "There are growing expectations that U.S. crude oil production will peak in 2027 and then decline. Additionally, more North American companies are planning to reduce capital expenditures (Capex) and production if West Texas Intermediate (WTI) falls below $60. The ongoing easing of the U.S.-China tariff war is also a contributing factor."

On May 23, S-Oil's stock price hit 50,000 won during trading hours, marking its lowest point in five years since closing at 48,500 won on March 23, 2020. Yoon emphasized, "The previous record lows were 38,170 won on November 5, 2014, and 49,150 won on May 27, 2010. On average, the stock price has bottomed out every five years." He added, "While the current stock price is similar to previous lows, the valuation is at a historic low."

He further predicted, "Considering that the price-to-book ratio (PBR) of 1 was the lower limit even during the sharp oil price declines in 2014 and 2020, the valuation discount that has persisted over the past five years is likely to be resolved soon."