[Edaily Reporter PARK MIN ] On the 28th, Yuanta Securities Korea projected that S-OilCorporation(010950)will see a significant improvement in earnings in the second half of the year, driven by strong refining margins and the decline in Saudi Arabia’s Official Selling Price (OSP) for crude oil. Consequently, the firm maintained its “Buy” rating and raised its target price from 175,000 won to 205,000 won. This represents a 50% upside potential compared to the previous day’s closing price of 136,700 won.

In a report published today, Hwang Kyu-won, an analyst at Yuanta Securities Korea, stated, “Attention should be paid to refining margins that have surpassed those in the U.S. and the effects of further declines in the OSP,” adding, “The company is entering a virtuous cycle of rising shareholder value thanks to business conditions that are far stronger than expected.”

According to Yuanta Securities Korea, S-OilCorporation’s combined refining margin for the second and third quarters exceeded $41 per barrel, surpassing the $39 recorded by Valero, a leading U.S. refiner. This was driven by reduced supplies of gasoline, kerosene, and diesel products in Asia following drone attacks on Russian refining facilities.

Yuanta Securities Korea analyzed that production disruptions accounting for 12–14% of global refined product demand are continuing due to the impacts of the Iran-Ukraine conflict. It estimated that production disruptions amount to 6 million barrels per day due to reduced crude oil supply through the Strait of Hormuz, 2.8 million barrels per day due to damage to Middle Eastern refining facilities, and 3 to 4 million barrels per day due to attacks on Russian refining facilities.

The decline in Saudi Arabia’s OSP is another factor contributing to further earnings improvement. The OSP for Saudi crude oil destined for Asia is expected to begin falling in September from its second-quarter level of $11.70 per BARREL. Yuanta Securities Korea estimated that for every $1 drop in the OSP, S-OilCorporation’s annual operating profit would increase by approximately 300 billion won. The firm also raised the possibility of further OSP declines as export competition among oil-producing countries intensifies.

Next year, the launch of the Shahin Project is also cited as a new growth driver. The Shahin Project was completed in June of this year and is scheduled to begin full-scale production in early 2027, following a trial run in the fourth quarter. It will secure a total production capacity of 4.8 million metric tons of petrochemical products, including 1.8 million metric tons of ethylene annually.

Yuanta Securities Korea estimated that the Shahin Project could generate annual operating profit of 303.4 billion won based on June 2026 prices. The firm analyzed that if the average spread over the past 10 years is applied, annual operating profit could expand to 470 billion won.

Improvements in the financial structure and expanded shareholder returns are also anticipated. Yuanta Securities Korea projected that S-OilCorporation’s free cash flow will increase to 2.4 trillion won this year and 3 trillion won next year. By utilizing these funds, the firm forecast that net debt could be reduced by approximately 3 trillion won in 2027, bringing it below 6 trillion won, and that the dividend per share could be raised to around 10,000 won.

Yuanta Securities Korea forecasts that S-OilCorporation’s operating profit will reach 5.2085 trillion won this year. This represents more than a 20-fold increase from last year’s operating profit of 235.6 billion won. In particular, following 2.4 trillion won in operating profit in the first half of the year, the firm expects the company to generate approximately 3 trillion won in operating profit in the second half alone. Third-quarter operating profit is estimated at 1.3434 trillion won, and fourth-quarter operating profit at 1.6690 trillion won.

The third-quarter earnings forecast significantly exceeds market expectations. Revenue is expected to reach 10.9946 trillion won, with operating profit at 1.3434 trillion won. In particular, operating profit is 33.1% higher than the market consensus of 1.0095 trillion won. Year-over-year, it is projected to increase by 486.1%.