[Click e-Stock] "S-Oil to Benefit from Higher Refining Margins amid Middle East Escalation... Target Price Raised"

On March 3, Samsung Securities maintained its "Buy" investment rating on S-Oil and raised its target price by 12%, from 125,000 won to 140,000 won.

On this day, Hyunryul Cho, a researcher at Samsung Securities, analyzed, "Following Israel and the United States' preemptive strike on Iran, the war is spreading throughout the Middle East. In the short term, the supply shortage of refined oil products will intensify more than that of crude oil."

S-Oil's performance in the first quarter of this year is expected to significantly exceed market expectations. Samsung Securities projects first-quarter operating profit at 595.8 billion won, up 40% from the previous quarter and 54% higher than the market consensus of 386.8 billion won.

The main driver of this performance improvement is the refining segment. Thanks to the recent rebound in international oil prices, inventory-related gains are surging, and the lagging effect (the time lag between raw material input and output) is also projected to improve significantly. The chemical segment is also expected to return to profitability, driven by improved spreads (the difference between product price and cost) for aromatic products such as benzene and PX (paraxylene).

Researcher Cho particularly highlighted the recent geopolitical opportunities. Even excluding the threat of a blockade of the Strait of Hormuz, incidents such as the shutdown of Saudi Aramco's Ras Tanura refinery and QatarEnergy's LNG (liquefied natural gas) production facilities due to drone attacks are making it increasingly difficult to balance supply and demand for refined products compared to crude oil.

He stated, "If the Middle East war continues, the operation of distillate-focused refining facilities in Asia, where there is no war risk, will stand out," and added, "We maintain our top pick rating for S-Oil within the sector."

This content was produced with the assistance of AI translation services.