[Edaily Reporter Shin Ha-yeon ] On the 7th, Hana Securities maintained its “Buy (BUY)” investment rating for S-OilCorporation(010950)and raised its target price from 130,000 won to 200,000 won, stating that structural cost-saving effects are expected to materialize as Saudi Aramco’s Official Selling Price (OSP) turns negative starting in August.

Yoon Jae-sung, an analyst at Hana Securities, stated, “A negative OSP signifies structural cost savings,” adding, “We have once again entered a strong ‘Buy’ zone.”

Analyst Yoon explained, “Second-quarter operating profit is projected to reach 1.02 trillion won, exceeding the consensus by about 13 percent,” adding, “This is due to a significant improvement in lubricant base oil performance driven by a sharp rise in selling prices, despite a slowdown in refining earnings.” He continued, “While a decline in refining profits is inevitable as inventory-related gains from the previous quarter are eliminated, the high OSP prevented significant inventory-related losses, and strong export margins in April and May are estimated to have contributed to the solid performance.” He also noted, “In the lubricant base oil segment, operating profit is expected to increase by 216% compared to the previous quarter, thanks to a nearly twofold surge in export prices to South Korea caused by prolonged disruptions at some facilities at Qatar’s Pearl GTL project.”

While third-quarter earnings are expected to slow temporarily, he assessed that there is no cause for concern. Researcher Yoon said, “Third-quarter operating profit is expected to decrease by 52% compared to the previous quarter, but this is merely a lag effect,” adding, “Since this is a lag effect resulting from the delayed reflection of the negative impact of the sharp drop in oil prices at the end of June, there is no need for concern.” He continued, “Once July passes, the current lower oil prices and OSP will take effect starting in August, so considering the favorable spot refining margins, it will be possible to generate high profits again.”

Analyst Yoon predicted that both earnings and dividend appeal would come into focus simultaneously. He stated, “Based on strong refining margins and cost-saving effects resulting from the OSP turning negative in August, we have raised our operating profit estimates for 2026–2027 by 25–40% respectively, and we have also raised our dividend estimates to reflect the completion of Capex.” He continued, “We took into account refining margins higher than those during the 2018–2019 upcycle; structural cost savings resulting from Dubai crude’s continued weakness relative to WTI and the shift to a negative OSP; the Shahin Project’s full-scale contribution to profits driven by weak oil prices; strong performance in the lubricant base oil segment; and increased dividend appeal.”

The firm added, “As net debt, which stood at 6 trillion won at the end of 2025, is expected to be significantly reduced in 2026–2027 and the investment cycle comes to an end, the dividend payout ratio is also projected to increase,” and “Dividends per share (DPS) for 2026–2027 are projected to be 4,200 won and 9,000 won, respectively, yielding dividend yields of 3.6% and 7.7%,” he added.