NH Investment & Securities Boosts S-Oil Target Amid Prolonged Negative OSP
NH Investment & Securities has raised its target price for S-Oil (010950) from ₩165,000 to ₩210,000, approximately $160, while maintaining a buy rating. The upgrade reflects the brokerage's view that S-Oil's structural advantage of sourcing crude below market benchmark prices will persist over the long term.
The company expects Middle Eastern oil producers to continue keeping official selling prices (OSP) low to defend their market share in Asia. OSP is the price adjustment applied on top of or subtracted from benchmark crude prices, such as Dubai crude, when producers sell oil. Lower OSP figures translate to reduced feedstock costs for refiners.
The October OSP for Asian buyers was set at -$2 per barrel (approximately ₩2,700), marking a third consecutive month in negative territory. Choi Young-kwang, an analyst at NH Investment & Securities, projects that this trend will persist over the medium to long term due to Middle Eastern producers' efforts to secure market share amid diversification of crude procurement sources.
The brokerage's revised estimates for S-Oil's earnings have been driven upward by its procurement cost advantage and strong refining margins. For 2027, NH Investment & Securities has raised its operating profit forecast for S-Oil by 25.7% from its previous estimate. In the third quarter of this year, the company's operating profit is estimated at ₩1.2945 trillion (approximately $961.8 million), up 34.1% from the previous quarter.