IBK Investment Securities emphasized on the 15th that S‑Oil’s operating profit is expected to account for about half of the company’s total profit in Q2 this year, underscoring the need to readjust its valuation approach. The analyst noted that “with a profit of ₩4,774 billion last year and a total operating profit of ₩9,650 billion—about 49.5%—S‑Oil’s operating profit was significant,” pointing out the limitations of approaches that only estimate results from revenue and cost alone.
In particular, the profit generated by oil‑lubricants has a direct impact on the company’s sustainability and capital efficiency. The analyst said “because a large part of the profit is derived from lubricants, if the long‑term financial burden eases, S‑Oil can improve its structure and positively influence share price volatility.”
Even if the lubricants’ profit decreases at present levels, the probability that it will revert to past averages is low. The analyst added: “If intermediate production and material flows normalize, the spread of excess returns will shrink; and if customers maintain repeated requests for supply and changes in approved policies are sustained, the profitability will not automatically return to past averages.”
IBK Investment Securities projected operating profit at ₩4 trillion 324 billion this year and ₩3 trillion 282 billion next year, raising its target price from ₩150,000 to ₩210,000 while maintaining a “buy” rating. (Kim Yeon‑ji, Korea Economic Daily)