SOUTH KOREA FIRST TO MARKET

Research evidence excerpt

SOUTH KOREA FIRST TO MARKET

Asia Pacific Equity Research

South Korea First to Market 04 August 2026

Top Stories

S-Oil Corp (Parsley Ong) (010950 KS, OW)

Guiding stronger Group III lubricant spreads and higher utilizations in 2H

S-Oil’s 2Q OP of W965bn beat Bloomberg consensus of W948bn, but slightly missed JPMe of W1.07trn due to weaker-than-

expected core refining earnings – likely due to domestic fuel price caps that we estimate caused domestic refining losses in

April-May. Management continued to expect government compensation in 4Q, but did not provide guidance on the dollar

amount (see Korea Energy: 2Q likely to beat on lubricants, with W4.2trn refiner compensation fund a 4Q tailwind – 12 July

2026). We do not embed government compensation in our earnings estimates. We note that S-Oil delivered ~W532bn refining

OP in 2Q, despite operating at only 76% utilization due to scheduled maintenance – we expect a return to 100% utilization in

2H. With Group 3 lubricant spreads trending even higher in 3QTD, we expect upward revisions to consensus 2H OP of W1.3trn

(JPMe W1.8trn). Our APAC refining pecking order is SK Innovation (OW) & TOP (OW) > S-Oil (OW) & FPCC (OW) > Sinopec/

Hengli/Rongsheng (N).

Korea Monthly Wrap (Mixo Das)

July 2026: A painful unwind

Performance: 1) Equity: KOSPI closed down 22% in July ( the worst month since October 2008) but was down -34% before a

sharp rally on the last day of the month. 2) By sector , Tech and Industrials were hit the hardest in July, while Energy and

Staples led the way. By style , Momentum unwound significantly in July (a -43% peak-to-trough correction in Price

Momentum). Growth also posted negative returns. On the flip side, Low Vol and Value gained sharply. 3) Currency: The