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Investing.com - Goldman Sachs upgraded S-Oil Corporation (KS:010950) (OTC:SOOCY) from Neutral to Buy and raised its price target to KRW80,000.00 from KRW67,000.00.
The upgrade comes as S-Oil, described as the "purest play refining stock" in Goldman’s Asia coverage, has underperformed global refining pure-play stocks by 26% year-to-date due to consensus earnings downgrades and ongoing capital expenditure cycles.
Goldman Sachs believes the current share price discounts mid-cycle diesel cracks in 2026 and assumes lower-for-longer chemical spreads for S-Oil’s upcoming Shaheen project, effectively pricing in a negative internal rate of return on the new chemical project.
The investment bank expects a valuation re-rating as S-Oil passes peak capital expenditure in 2025 and approaches an inflection point for free cash flow (projected 25% yield in 2027) and return on equity (estimated 11% in 2027 versus 2% in 2025).
Goldman Sachs raised its core EBITDA estimates by up to 7%, positioning its outlook 15% and 25% above Bloomberg consensus for 2026 and 2027, respectively, while projecting a 41% compound annual growth rate over 2025-2028, driven by a structurally positive view on the refining sector and earnings contribution from the Shaheen project.
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