NH Investment & Securities said on the 16th that S-OIL's performance in the second quarter of this year is expected to be significantly poor; however, there is expected to be a strong rebound after the third quarter. They raised their target price from the previous 67,000 won to 78,000 won and maintained their investment opinion as "buy."
S-OIL's operating loss in the second quarter is projected to reach 193.5 billion won, while the operating loss in the refining institutional sector is expected to be 250.1 billion won. Although geopolitical reasons caused a sharp increase in oil prices in June, the average oil price in the second quarter is significantly lower compared to the first quarter. Despite the strong refining margins, inventory valuation losses are expected to reach 166 billion won, so the loss is likely to continue to increase in the second quarter. The operating loss in the chemical institutional sector is also expected to continue to be weak at 77.7 billion won.
However, as refining margins show a solid trend, the performance is expected to rebound significantly after the third quarter. The market expectation for S-OIL's performance in the third quarter is 178.6 billion won, but results exceeding this are anticipated.
Choi Young-kwang, a researcher at NH Investment & Securities, noted, "Refining margins fell from $10.7 in January to -$0.4 in March but rebounded to $10.8 in June," and added, "Considering the strong refining margins and the disappearance of inventory valuation losses, the operating profit in the third quarter is expected to turn into a surplus of 413.3 billion won."