JPM | Meet Zijin Gold? Aus Mining Feedback, China Solar Prices Jump, PTTEP New CEO Driving Volume Growth, S-Oil First Take & Off the call

Research evidence excerpt

JPM | Meet Zijin Gold? Aus Mining Feedback, China Solar Prices Jump, PTTEP New CEO Driving Volume Growth, S-Oil First Take & Off the call

Specialist Sales

APAC Specialist Sales J P M O R G A N

04 August 2026

• 2Q beat on lubricants, guiding strong 2H outlook: S-Oil’s lubricant OP rose by 187% q/q to W477bn – a new record high

– despite lubricant utilizations of only 94% in 2Q likely caused by feedstock limitations due to scheduled maintenance.

We forecast higher 3Q lubricant OP given the ongoing shortage in Group 3 lubricant supply. S-Oil has >35% Group III

capacity mix (Group 2+3 = >95%), vs SK Inno at 100%.

• Full utilization in 2H26: Management commented that S-Oil completed major turnarounds in mid-April, and expects full

utilization in 2H26. The company has made alternative arrangements in light of the Middle East conflict and secured crude

oil via alternative shipping routes from Yanbu and securing alternative crude oil grades. In light of the additional 30-day

shipping time incurred, the company is exploring using Korea SPR and inventories to maintain full utilizations.

Key negative/neutral

• ND/E continues to rise despite better earnings: S-Oil’s ND/E continued to rise q/q to 78% in 2Q, likely due to the ongoing

capex burden from the SHAHEEN project (SK Inno: ND/E fell q/q to 63%). Management expects the project to

commence earnings contribution in 1Q27. We expect the company to focus on reducing debt before increasing the payout

ratio from current levels of 20% to 30% or higher in the mid-LT. The company aims to maintain an 80-100% debt-to-

equity ratio.

Quick Notables from attending Management Call…

• Argued that we should see “strong” (not quantified) refining margins & Lubricant spreads into H226 & even in 2027 despite

de-escalation.