20150106-三星证券-Fundamentals_robust_despite_oil_drop_23页_547kb
报告摘要
Sector Update Summary
Core Content
This document provides an analysis of the performance and outlook for the Oil Refining/Chemicals sector, with a specific focus on the 4Q 2014 results and 1Q 2015 expectations. It highlights the impact of falling oil prices on both refining and chemical firms, as well as the updated target prices and valuations for key players in the sector.
Main Points
1. 4Q Performance Overview
- Refiners reported significant operating losses due to the drop in oil prices.
- SK Innovation: Operating profit dropped to KRW 147 billion (from KRW 63 billion).
- LG Chem: Operating profit fell to KRW 326 billion (from KRW 550 billion).
- Refining margins improved slightly in 4Q, with Singapore gross refining margin rising by USD1.5/bbl to USD6.3/bbl.
- Middle East OSP differentials for Asia-bound shipments were at a post-2004 low, which could help in 1Q recovery.
- Chemical firms experienced a larger-than-expected decline in operating profit, with an average drop of 16.6% q-q, missing consensus by 17%.
- Polyethylene showed stronger performance than expected due to wider spot spreads.
2. Sector Outlook for 1Q
- Refining sector is expected to turn around if oil prices stabilize.
- Winter demand will keep refining margins solid until mid-February.
- Middle East OSP differentials are at historical lows, indicating potential for improvement.
- Chemical firms will benefit from lower naphtha prices starting in February.
- Polyethylene firms are expected to enjoy solid profit growth due to record-high spreads.
- Oil price stabilization is likely to trigger restocking, limiting the risk of spread narrowing.
3. Rating and Target Price Adjustments
- Refiners are rated NEUTRAL, while chemical firms are upgraded to OVERWEIGHT.
- SK Innovation and LG Chem are highlighted as top picks.
- Target prices and valuation multiples have been updated based on expected earnings and market conditions.
- SK Innovation: Target price at KRW 120,000 (+50.9% upside).
- LG Chem: Target price at KRW 250,000 (+50.6% upside).
- Valuation methodology varies: P/E, P/B, and EV/EBITDA + SOTP are used for different firms.
Key Information
4Q Results Summary
| Company | Sales (KRWb) | Operating Profit (KRWb) | Net Profit (KRWb) |
|---|---|---|---|
| SK Innovation | 13,808 | (182) | (147) |
| S-Oil | 5,640 | (156) | (218) |
| GS Holdings | 2,800 | (69) | (86) |
| LG Chem | 5,029 | 283 | 219 |
| Lotte Chemical | 2,921 | 111 | 77 |
| Hanwha Chemical | 1,910 | 31 | (18) |
| KPC | 998 | 58 | 38 |
| KPIC | 448 | 21 | 16 |
| SKC | 752 | 39 | 16 |
| Huchems | 152 | 14 | 13 |
| Samsung Fine Chemical | 279 | 1 | (1) |
| OCI | 728 | 15 | (3) |
| Toray Chemical | 224 | 10 | 6 |
1Q Outlook
- Refining margins are expected to normalize if oil prices stabilize.
- Chemical sector will benefit from lower naphtha prices and wider spreads.
- Polyethylene is highlighted as a key beneficiary of the oil price decline.
Target Price and Valuation Changes
| Company | Target Price (KRW) | Upside (%) | Valuation Method | Target Multiple |
|---|---|---|---|---|
| SK Innovation | 120,000 | 50.9 | P/E | 12.0 |
| S-Oil | 62,000 | 37.5 | P/E | 12.0 |
| GS Holdings | 43,000 | 12.1 | P/E | 10.0 |
| LG Chem | 250,000 | 50.6 | P/E | 12.0 |
| Lotte Chemical | 190,000 | 30.1 | P/E | 11.0 |
| Hanwha Chemical | 16,000 | 44.8 | P/B | 0.66 |
| KPC | 95,000 | 17.3 | P/E | 10.0 |
| KPIC | 100,000 | 49.7 | P/E | 9.0 |
| SKC | 35,000 | 30.8 | P/E | 12.0 |
| Huchems | 30,000 | 16.5 | P/E | 17.0 |
| Samsung Fine Chemical | 44,000 | 36.9 | P/B | 1.0 |
| OCI | 113,000 | 59.6 | EV/EBITDA+SOTP | 5.0 |
| Toray Chemical | 16,000 | 15.9 | P/E | 16.0 |
Conclusion
- The refining sector is currently underperforming due to oil price declines, but a recovery is expected in 1Q if prices stabilize.
- The chemical sector is more resilient, with stronger performance in polyethylene and other downstream products.
- SK Innovation and LG Chem are recommended as top picks for the chemical sector.
- Valuation adjustments reflect expected earnings and market conditions, with target prices and multiples updated accordingly.
- Investors are advised to focus on chemical firms due to better earnings potential and less capacity expansion pressure compared to refiners.
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