S-Oil (010950) In-Depth Analysis: Imminent Completion of the Shaheen Project and Normalization of Refining Segment Earnings
S-Oil is a domestic refiner with Saudi Aramco as its parent company. In Q1 2026, it recorded an operating profit of KRW 1.2311 trillion, turning profitable from an operating loss in the same period a year earlier. With the completion of the Shaheen Project — which has absorbed a total investment of KRW 9.258 trillion — now imminent, the divergence between a Trailing PER of 75.8x and a Forward PER of 6.0x has drawn market attention, centered on whether 2025 marked the trough in earnings.
1. Company Overview and Core Business
S-Oil (010950) operates an integrated refining, petrochemical, and base oil production complex at the Onsan Industrial Complex in Ulsan, with Saudi Aramco (63.4% stake) as its largest shareholder. In Q1 2026, it posted consolidated revenue of KRW 8.94 trillion and operating profit of KRW 1.2311 trillion, turning profitable versus an operating loss of KRW 21.5 billion in the same period a year earlier. Full-year 2025 revenue was KRW 34.2 trillion with operating profit of KRW 236 billion, implying an operating margin of 0.7%. As of May 14, 2026, market capitalization stands at KRW 12 trillion. With approximately 90% of crude oil sourced from the Middle East, Aramco's pipeline bypass export system underpins supply security.
📌 Q1 operating profit of KRW 1.23 trillion turns profitable | Aramco's 63.4% stake is the foundation of crude supply stability
2. Core Product Competitiveness Analysis
The refining segment accounts for approximately 79% of total revenue and drove overall results with Q1 2026 operating profit of KRW 1.04 trillion. The Shaheen Project, with total investment of KRW 9.258 trillion, reached EPC completion of 96.9% as of end-April 2026, targeting mechanical completion in June, commissioning in H2 2026, and commercial operations in early 2027. Upon completion, an integrated refining-petrochemical value chain will be established, encompassing a steam cracker (ethylene capacity: 1.8 million tons per annum), TC2C, and polymer plants. The base oil segment recorded a Q1 operating margin of 22.6% amid tight diesel supply conditions, while the petrochemical segment turned profitable with an operating profit of KRW 25.5 billion.
| Category | Details |
|---|---|
| Position | Among domestic refiners, holds direct crude procurement linkage with Aramco and vertical integration in base oils |
| Competitive Advantages | Stable crude supply through parent Aramco | Establishment of olefin self-sufficiency upon Shaheen Project completion |
| Competitive Disadvantages | Weak PX spreads leave petrochemical segment profitability vulnerable | High earnings sensitivity to refining margin fluctuations |
3. Valuation Analysis
Based on the current share price of KRW 115,000 as of May 14, 2026, the Trailing PER stands at 75.8x, significantly above the sector average of 32.5x. This elevated multiple reflects the low base of KRW 236 billion in full-year 2025 operating profit; the Forward PER incorporating 2026 earnings recovery is 6.0x, which is below the sector average of 8.8x.*1 Hanwha Investment Securities estimates full-year 2026 operating profit at KRW 3.621 trillion*2, while Hana Securities estimates KRW 2.7003 trillion.*3 PBR stands at 1.51x at the current price, and ROE, which was 2.0% in 2025, is expected to rise depending on the magnitude of the 2026 earnings recovery.
📌 Forward PER of 6.0x represents a discount to the sector average of 8.8x — whether 2025 marked the earnings trough is the key variable
| Metric | Current | Sector Average | Interpretation |
|---|---|---|---|
| Trailing PER | 75.8x | 32.5x | Reflects 2025 earnings trough; elevated multiple is temporary |
| Forward PER | 6.0x | 8.8x | Discount to sector when 2026 earnings normalization is priced in |
| PBR | 1.51x | — | In-line with asset value |
| ROE | 2.0% | — | Based on 2025 earnings trough |
4. Risks and Monitoring Points
Margin erosion in the domestic market from the implementation of the domestic petroleum price cap system, and the continuation of Saudi Aramco's OSP (Official Selling Price) at historically elevated levels, represent cost headwinds. Persistent weakness in PX spreads leaves residual pressure on petrochemical segment profitability, and any delay in the Shaheen Project's commissioning and commercial operations schedule could impair the visibility of the chemical segment's 2027 earnings.
- ⚠️ Refining domestic margin erosion from the continued domestic petroleum price cap
- ⚠️ Rising raw material procurement costs if Aramco's OSP remains at elevated levels
- ⚠️ Risk of petrochemical segment turning to a loss amid persistent PX spread weakness
- ⚠️ Weakened visibility of 2027 chemical earnings if Shaheen Project commercial operations are delayed
- 📌 Monthly check on whether complex refining margins (Spot) fall below $10/bbl
- 📌 Shaheen Project EPC completion rate and mechanical completion schedule (target: June 2026)
- 📌 Monthly trend in Aramco OSP and timing of the domestic petroleum price cap expiration
5. Recent DART Disclosures
As of May 2026, two key DART disclosures from S-Oil have been selected.
| 날짜 | 공시명 | 요약 |
|---|---|---|
| 2026-05-11 | Preliminary Consolidated Operating Results (Fair Disclosure) | Q1 2026 consolidated revenue of KRW 8.9427 trillion and operating profit of KRW 1.2311 trillion, turning profitable from an operating loss of KRW 21.5 billion in the same period a year earlier. Inventory-related gains of KRW 643.4 billion were disclosed as the primary driver of earnings improvement. |
| 2026-04-27 | Investor Relations (IR) Event Notice | Disclosure of an IR event for institutional investors ahead of the Q1 2026 earnings release. The Shaheen Project progress update and segment earnings outlook were announced as the key agenda items. |
S-Oil passed its 2025 earnings trough, and refining segment profitability entered a normalization trajectory in Q1 2026. The Shaheen Project completion schedule and the trajectory of refining margins and OSP remain the key variables determining the future earnings path.
📎 출처 및 추정 근거
- *1 Forward PER of 6.0x and sector average Forward PER of 8.8x: calculated by dividing the Forward EPS consensus from the TradeAlert DB as of 2026-05-14 by the current share price of KRW 115,000
- *2 Hanwha Investment Securities' full-year 2026 operating profit estimate of KRW 3,621 billion: based on a company analysis report published on 2026-05-12 (Analyst: Lee Yong-wook, Hanwha Investment Securities Research Center)
- *3 Hana Securities' full-year 2026 operating profit estimate of KRW 2,700.3 billion: based on an Earnings Review report published on 2026-05-12 (Analyst: Yoon Jae-sung, Hana Securities)
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