Gold prices bounce off 3-week lows; demand likely longer term
On Wednesday, Goldman Sachs analyst Nikhil Bhandari adjusted the outlook for S-Oil Corporation, a company listed on the Korea Exchange (010950:KS) and also traded over-the-counter (OTC: SOOCY). The firm’s stock rating was downgraded from Buy to Neutral, accompanied by a decrease in the price target from KRW80,000.00 to KRW60,000.00.
Bhandari’s commentary highlighted the performance of S-Oil’s shares since they were added to Goldman Sachs’ Buy list on April 4, 2022. The shares have seen a decline of 49% compared to the KOSPI’s 12% drop. This significant underperformance is attributed to weaker-than-expected Singapore Gross Refining Margins (GRMs), which have been affected by lower GDP growth and a deteriorating cost curve position for Asian refiners.
The new price target of KRW60,000.00 suggests a 16% potential upside, which is in line with the average upside for the firm’s Asia Energy & Chemicals sector coverage. The downgrade reflects a reassessment of S-Oil’s investment profile in the context of the current market conditions and industry-specific challenges.
S-Oil Corporation, with its shares traded both in South Korea and on the OTC market, has been navigating a challenging economic environment. The factors influencing the downgrade include regional economic indicators and industry dynamics that have impacted refining margins.
Investors in S-Oil Corporation and market observers will be monitoring the company’s performance to see if it aligns with Goldman Sachs’ revised expectations. The firm’s analysis will likely continue to influence market sentiment as investors consider the potential for S-Oil’s shares to recover from their recent declines.
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