[THE INVESTOR] S-Oil’s earnings in the fourth quarter will increase from improving margin of paraxylene, said Shinhan Investment on Oct. 29 maintaining a “buy” recommendation and 170,000 won (US$149.32) target price.
Its operating profit in the period will hike 34.5 percent on-year to 424.8 billion won fully reflecting the chemical’s US$111 per ton margin rise. From next month it will also begin operation of new facilities that will manufacture high value added products such as gasoline and propylene derivatives from bunker C fuel oil. Considering the 4.8 trillion won investment and six year collection period, its EBITDA will reach 800 billion won, said analyst Lee Eung-ju.
Its operating profit in the third quarter, however, came in at 315.7 billion won missing market expectations, as profits from refinery unit dropped by 133.7 billion won and oil price rise temporarily slowed down denting 125 billion won in inventory-related profits. Although the third-quarter earnings have dipped, its prospects are still rosy and earnings per share next year will leap 75.5 percent, added the analyst.
By Hwang You-mee (email@example.com)