S-Oil: 1Q beat on high margins; expect long-term tight supply for refined products; Buy

Research evidence excerpt

S-Oil: 1Q beat on high margins; expect long-term tight supply for refined products; Buy

pping disruptions in the Strait of Hormuz; 2) damages to refining Research Analyst Merrill Lynch (Seoul)

facilities in the Middle East (4mn+ bpd; see Exhibit 4); 3) run cuts at Asian refineries due taekyoung.ha@bofa.com

to crude supply constraints (global run rates: 75% in 2Q vs. 80% in 1Q, according to

S&P); and 4) China curtailing refined fuel exports (China exports at c.700k bpd p.a.). In

addition to our pre-war forecasts of global refining capacity growth (0.63mn/0.84mn bpd

Stock Datain 2026/27 likely below demand growth of 1mn/1mn bpd), we expect the supply

constraints from the Middle East tensions to offer further upside to GRM in 2H26. Price 116,600 KRW

Expect QoQ OP decline in 2Q, but reiterate Buy Price Objective 160,000 KRW

We see S-Oil’s 2Q OP at W577bn (-53% QoQ), of which QoQ decline is on higher OSP Date Established 4-Mar-2026

(US$12.5/bbl in 2Q vs. US$0.3/bbl in 1Q) and larger impacts from domestic fuel price Investment Opinion B-1-7

cap, while Asia GRM at US$47/bbl QTD (+117% QoQ) will likely support profitability. We 52-Week Range 50,000 KRW-179,700

update our 2026-28 estimates and reiterate Buy on S-Oil, on its operating leverage to KRW

long-term solid GRM amid tight supply-demand situation of refined products. Mrkt Val / Shares Out (mn) 8,927 USD / 112.6

Estimates (Dec) (W) 2024A 2025A 2026E 2027E 2028E Market Value (mn) 13,127,154 KRW

Net Income (Adjusted - mn) (194,047) 176,130 1,788,311 1,509,815 1,619,710 Average Daily Value (mn) 71.17 USD

EPS (1,724) 1,564 15,884 13,411 14,387 Free Float 27.2%

EPS Change (YoY) NM NM 915.3% -15.6% 7.3% BofA Ticker / Exchange SOOCF / KSC

Consensus EPS (Visible Alpha) 12,804.47 10,413.86 11,477.39

Bloomberg / Reuters 010950 KS /