20171017-三星证券-Valuation_near_bottom_among_global_refiners_11页_547kb
报告摘要
SK Innovation Summary
Core Content
SK Innovation is a South Korean refiner and chemical company that has been reinstated for coverage with a BUY recommendation and a 12-month target price of KRW260,000. The stock currently trades at KRW209,500, which is below its fair price based on a P/B valuation of KRW257,915 and the 2018 P/B of KRW219,964 with a target P/B of 1.17x.
The company is viewed as one of the cheapest refiners globally, offering attractive valuations, strong refining margins, and growing chemical earnings. Additionally, it has a dividend policy that is strengthening, with a projected dividend yield of 3.9% in 2018, and has a battery business that is expected to benefit from EV market growth.
Main Points
- Refining margin is on a long-term uptrend, driven by increasing global oil demand and limited supply growth.
- Chemical earnings are expected to grow due to the ongoing NCC expansion phase, with the acquisition of Dow's EAA unit enhancing its position in the specialty polymer market.
- Dividend policy strengthening with the introduction of interim dividends, which could trigger a rerating of the stock.
- Valuation is near the bottom among global refiners, with a forward P/B of 0.95x, significantly lower than the global average of 1.7x.
- Target price is based on 1.17x 2018 P/B, suggesting potential upside of 24.1%.
- The battery business is positioned to benefit from EV market growth, offering additional growth avenues.
Key Information
Financial Highlights (2016-2018E)
| Metric | 2016 | 2017E | 2018E |
|---|---|---|---|
| Revenue (KRWb) | 39,521 | 46,102 | 49,760 |
| Net profit (adj) (KRWb) | 1,721 | 2,356 | 2,499 |
| EPS (adj) (KRW) | 17,834 | 24,537 | 26,021 |
| P/E (adj) (x) | 11.7 | 8.5 | 8.1 |
| P/B (x) | 1.1 | 1.0 | 0.9 |
| EV/EBITDA (x) | 5.2 | 5.2 | 4.7 |
| Dividend yield (%) | 3.1 | 3.8 | 3.9 |
Valuation Comparison with Peers
| Company | P/E (2017E) | P/E (2018E) | P/E (2019E) | EPS Growth (2017E) | EPS Growth (2018E) | EPS Growth (2019E) | P/B (2017E) | P/B (2018E) | P/B (2019E) | ROE (2017E) | ROE (2018E) | ROE (2019E) | EV/EBITDA (2017E) | EV/EBITDA (2018E) | EV/EBITDA (2019E) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SK Innovation | 8.6 | 8.1 | 7.6 | 37.6% | 6.0% | 6.6% | 1.0 | 1.0 | 0.9 | 12.8% | 12.4% | 12.1% | 5.2 | 4.7 | 4.4 |
| S-Oil | 12.7 | 10.0 | 7.9 | 26.8% | 26.1% | 23.6% | 2.2 | 2.0 | 1.8 | 18.2% | 21.1% | 23.6% | 10.2 | 7.3 | 5.2 |
| GS | 6.5 | 7.0 | 6.5 | 19.0% | (7.0)% | 7.1% | 0.8 | 0.8 | 0.7 | 12.9% | 11.5% | 11.1% | 7.9 | 7.9 | 7.4 |
| ExxonMobil | 23.8 | 20.5 | 19.7 | 46.7% | 16.2% | 3.8% | 2.0 | 2.0 | 1.9 | 8.7% | 9.5% | 10.4% | 9.6 | 8.2 | 7.9 |
| Shell | 17.2 | 15.4 | 14.5 | 92.8% | 11.3% | 6.3% | 1.3 | 1.3 | 1.3 | 7.7% | 9.2% | 9.1% | 6.4 | 5.6 | 5.2 |
| Chevron | 30.1 | 25.3 | 22.2 | 307.7% | 19.1% | 14.0% | 1.6 | 1.6 | 1.6 | 5.2% | 5.6% | 7.1% | 8.3 | 7.4 | 6.9 |
| BP | 22.9 | 17.1 | 15.4 | 106.7% | 34.0% | 10.7% | 1.4 | 1.4 | 1.4 | 5.4% | 7.5% | 8.9% | 6.6 | 5.9 | 5.4 |
| Sinopec | 12.7 | 12.1 | 11.0 | 19.0% | 4.8% | 9.8% | 1.0 | 0.9 | 0.9 | 7.5% | 7.5% | 7.7% | 4.8 | 4.7 | 4.4 |
| Reliance | 18.8 | 16.0 | 14.6 | (7.9)% | 17.2% | 9.3% | 1.8 | 1.7 | 1.5 | 5.0% | 8.1% | 7.6% | 12.9 | 11.0 | 9.7 |
| CNOOC | 12.0 | 10.8 | 9.0 | 6,870.0% | 11.5% | 20.1% | 1.0 | 0.9 | 0.9 | 9.9% | 19.8% | 27.5% | 4.2 | 3.9 | 3.4 |
| PTT | 10.7 | 10.9 | 10.3 | 26.5% | 26.8% | 26.1% | 1.3 | 1.2 | 1.1 | 12.6% | 11.7% | 11.9% | 5.4 | 5.1 | 4.4 |
| Valero | 16.7 | 13.5 | 12.7 | 25.7% | 23.7% | 6.3% | 1.7 | 1.7 | 1.7 | 10.9% | 12.7% | 11.6% | 7.1 | 6.3 | n/a |
| FPCC | 14.9 | 17.8 | 17.0 | (10.2)% | (16.3)% | 4.6% | 3.2 | 3.1 | 3.0 | 20.1% | 17.8% | 17.7% | 10.2 | 11.5 | 11.1 |
Key Drivers
- Refining margin: Expected to rise due to increasing global oil demand and limited supply growth.
- NCC cycle: Chemical earnings are expected to grow due to the expansion phase of the NCC cycle, supported by the acquisition of Dow's EAA unit.
- Dividend policy: The company has initiated interim dividends and plans to increase DPS annually, leading to a dividend yield of 3.9% in 2018.
- Battery business: A growth opportunity as the EV market expands.
- Valuation: The company is undervalued relative to its peers, with a P/B of 0.95x and a target P/B of 1.17x.
Outlook
The analyst expects the company to benefit from long-term favorable conditions in the refining sector and a rising dividend yield, which could trigger a rerating. The target price of KRW260,000 is based on a P/B of 1.17x and a 2018 P/B of KRW219,964. The stock is considered a top refiner pick due to its attractive valuation, strong refining margins, and dividend policy improvements.
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