SK Innovation to improve further

 SK Innovation widely beat market expectations in the first quarter and its earnings will improve further, said Kiwoom Securities on April 26, raising the target price to 240,000 won (US$212.67) from 220,000 won and maintaining a “buy” recommendation.

Revenue increase across sectors on the back of oil price hike and improved spread in chemical division more than compensated for the slight decline in refinery profits, said analyst Lee Dong-uk.

It underwent the largest maintenance in company history last year and expanded production capacity through enhancing certain processes while demand is stronger than expected, noted the analyst.

Mirae Asset Daewoo agreed that it will continue to generate high profits this year, raising the target price to 220,000 won.

Its oil refinery division will continue to gain from low price as US shale companies increase supply, and chemical part will gain from the recovery of benzene, explained analyst Park Yeon-ju.

Kyobo Securities too was optimistic that it will be the largest beneficiary of low oil price, raising the target price to 260,000 won from 220,000 won and maintaining a “buy” recommendation.

Its second-quarter earnings will be boosted by the higher profit from refinery, forecast analyst Son Yeong-ju, advising investors to purchase promptly.

By Hwang You-mee (glamazon@heraldcorp.com)