20171017-三星证券-Plenty_of_reasons_for_optimism_12页_549kb

报告摘要

S-Oil (010950) Summary

Core Content

S-Oil is a South Korean energy company that has been reinstated for coverage with a BUY recommendation and a 12-month target price of KRW160,000, indicating a potential 22.1% upside from the current price of KRW132,000. The report outlines the company's growth prospects, valuation metrics, and strategic initiatives, emphasizing its strong refining margin, upcoming capacity expansion, and dividend yield potential.

Main Points

Reasons for Optimism

Refining Margin Uptrend: Refining margin is expected to remain on a longer-term uptrend due to slower supply growth than demand over 2017-2020.
Capacity Expansion: S-Oil plans to operationalize its RUC/ODC complexes by 2H18. These facilities, costing KRW4.8t, are projected to generate over KRW600b in annual operating profit.
Earnings and Dividend Growth: Earnings are expected to grow significantly, leading to higher dividend yields. The company's historical dividend payout ratio (40-60%) suggests that profit growth will translate into increased dividends.
Positive Outlook on Petrochemical Demand: Concerns about oversupply of PP and PO are considered overblown, as demand in the region is expected to outpace supply, maintaining high utilization rates.

Valuation Analysis

Target P/B: 2.36x (1 standard deviation above 10-year average of 1.83x)
Forward BPS: KRW65,719
Fair Price per Share: KRW155,098
Current Price: KRW132,000
Upside: 22.1%

Financial Performance (2016-2018E)

Metric	2016 (KRWb)	2017E (KRWb)	2018E (KRWb)
Revenue	16,322	19,621	21,667
Net Profit (Adj)	1,205	1,202	1,525
EPS (Adj)	10,337	10,308	13,075
EPS Growth (% y-y)	90.9	-0.3	26.8
EBITDA Margin (%)	11.7	9.0	11.5
ROE (%)	20.5	18.2	21.1
P/E (Adj)	12.8	12.8	10.1
P/B (x)	2.4	2.3	2.0
EV/EBITDA (x)	8.3	10.5	7.5

Capacity Expansion Impact

RUC/ODC Facilities: Expected to reduce the sales portion of low-value-added heavy crude from 12% to 4%, while increasing the share of light crude and petrochemicals.
Sales Mix Shift: PX share will fall from 71% to 46%, while olefin share will rise from 8% to 37%.
PP/PO Oversupply: Expected to be limited due to strong regional demand, with PO utilization likely to remain above 88%.

Peer Comparison

Peer Group	P/E (2017E)	P/E (2018E)	P/E (2019E)	EPS Growth (%)	P/B (2017E)	P/B (2018E)	P/B (2019E)
S-Oil	12.7	10.0	7.9	(0.3)	2.2	2.0	1.8
SK Innovation	8.6	8.1	7.6	37.6	1.0	1.0	0.9
GS	6.5	7.0	6.5	19.0	0.8	0.8	0.7
ExxonMobil	23.8	20.5	19.7	46.7	2.0	2.0	1.9
Shell	17.2	15.4	14.5	92.8	1.3	1.3	1.3
Chevron	30.1	25.3	22.2	307.7	1.6	1.6	1.6
BP	22.9	17.1	15.4	106.7	1.4	1.4	1.4
Sinopec	12.7	12.1	11.0	19.0	1.0	1.0	0.9
Reliance	18.8	16.0	14.6	-7.9	1.8	1.7	1.5
CNOOC	12.0	10.8	9.0	6,870.0	1.0	0.9	0.9
PTT	10.7	10.9	10.3	26.5	1.3	1.2	1.1
Peer Average	15.3	13.8	12.7	470.9	1.8	1.7	1.6

Key Information

Refining Margin: Expected to rise due to slower supply growth than demand, increasing utilization from 82.9% in 2016 to 84.9% in 2020.
RUC/ODC Investment: KRW4.8t, set to generate over KRW600b in annual operating profit by 2018.
Dividend Yield: Projected to increase to 6% in 2018, driven by profit growth.
Market Cap: KRW14.9t/USD13.2b as of 2017.
Share Float: 112,582,792 (36.5%).
52-Week Range: KRW132,000 (high) to KRW78,500 (low).
Average Daily Trading Value (60-day): KRW35.2b/USD31.2m.
Recommendation Distribution: BUY★★★:5/BUY:4/HOLD:3/SELL:2/SELL★★★:1.
Date: 2017. 10. 17.

Conclusion

The report is optimistic about S-Oil's future performance, citing strong refining margin trends, the potential of its capacity expansion, and the likelihood of rising dividend yields. The company is currently undervalued relative to its forward-looking P/B and is expected to outperform peers due to its strategic investments and market conditions.

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