Mirae Asset Raises S-Oil Target to ₩135,000 as Refining Beat Collides With Price Cap

TL;DR - Mirae Asset Securities lifted its S-Oil price target to ₩135,000 ($98.50) from ₩120,000 ($87.60), retaining BUY on stronger refining-margin forecasts after the Hormuz disruption. - S-Oil's Q1 2026 operating profit reached ₩1.2311 trillion ($898 million), beating the ₩1.169 trillion ($853 million) consensus, with refining alone contributing ₩1.0390 trillion ($759 million). - The swing factor is Seoul's revived fuel price cap — extended five times since March — which Mirae estimates could cost S-Oil roughly ₩900 billion ($657 million) if it runs through June.

Lead. Mirae Asset Securities, one of Korea's largest brokerages, raised its 12-month target on S-Oil (010950.KS) — the Saudi Aramco-affiliated Korean refiner — to ₩135,000 ($98.50) from ₩120,000 ($87.60), keeping a BUY rating. The upgrade reflects the same dilemma now confronting analysts: a record refining quarter and a wartime price cap, layered on top of each other.

What Happened

In a note published this week, Mirae Asset upgraded its S-Oil target by 12.5%, citing stronger refining margins in its revised earnings forecast, according to Asiae, a Korean business news outlet. The new target implies 21.7% upside to S-Oil's prior close of ₩110,900 ($80.95), the brokerage said. Mirae attributed the margin upgrade to the Strait of Hormuz blockade, writing that "the Hormuz Strait blockade has led to increased crude oil and petroleum product prices overall," and that normalization could take more than three months even after any resolution.

The same Mirae note that lifted the target also embedded the central caveat: the timing of the end of Korea's petroleum maximum-price policy ("최고가격제") and the size of refiner loss compensation could materially swing 2026 earnings.

Why It Matters

This is the first concrete signal that sell-side desks are willing to underwrite higher S-Oil earnings power through the Hormuz disruption — but only conditionally, and only with the price-cap clause attached. The structural shift is that two distinct regimes — a tight, war-driven refining cycle and a Korean retail price ceiling — are now setting earnings simultaneously, and analysts can no longer model one without the other. Refining margins are visible quarter-to-quarter, but cap-related compensation is not, and that is now the variable that decides the valuation.

Business Impact

S-Oil's Q1 2026 operating profit reached ₩1.2311 trillion ($898 million), beating the ₩1.169 trillion ($853 million) consensus and crossing the trillion-won line for the first time since Q2 2022, per Asiae's summary of the Mirae note and Kyunghyang Shinmun, a Korean daily newspaper. The refining segment alone delivered ₩1.0390 trillion ($759 million), with inventory-related gains across divisions totaling ₩643.4 billion ($470 million) as crude valued at pre-conflict prices was re-marked higher, per the same Mirae summary.

The same forces cut the other way into Q2. Mirae projects Q2 2026 operating profit of ₩491.7 billion ($359 million), a roughly 60% quarter-on-quarter decline, and flags a potential loss of about ₩900 billion ($657 million) if Korea's price cap runs through June. UPI reported that S-Oil itself flagged "earnings volatility and downside risks" if oil prices retreat and trigger inventory write-downs.

Industry & Historical Context

Korea's price cap on gasoline, diesel and kerosene was revived in March 2026 under Article 23 of the Petroleum Business Act, a provision dormant for roughly 30 years since the 1997 oil-price liberalization, per Seoul Economic Daily. The second-phase cap took effect on March 27, 2026 and has been extended five times, most recently through May 22 at ₩1,934 ($1.41) per liter for gasoline, ₩1,924 ($1.40) for diesel and ₩1,530 ($1.12) for kerosene, according to Seoul Economic Daily's May 7, 2026 report. Vice Industry Minister Moon Shin-hak said the government "decided to freeze the maximum price again, taking into account that rising oil prices lead to higher costs."

Refiner losses had surpassed ₩3 trillion ($2.19 billion) since the price ceiling took effect in mid-March, and the government has allocated ₩4.2 trillion ($3.07 billion) in reserve funds to compensate the industry, with those funds described as "nearly depleted," per Seoul Economic Daily's May 3, 2026 reporting. A "Maximum Price Settlement Committee" tasked with calculating refiner compensation is set to launch within May 2026, MOTIE (Korea's Ministry of Trade, Industry and Energy) said in the May 7 Seoul Economic Daily report.

What to Watch

• The May 22 cap review and whether the freeze is extended a sixth time.
• Whether the Maximum Price Settlement Committee adopts international product prices — the refiners' preferred basis — or production costs when calculating compensation.
• Q2 2026 results, where Mirae's ₩491.7 billion ($359 million) operating-profit estimate becomes the first real check on cap-versus-margin math.
• The pace of S-Oil's crude cargo recovery from parent Saudi Aramco, which UPI reported was disrupted in March and April and is projected to normalize in May and June.

Sources: - Asiae — https://www.asiae.co.kr/article/2026051117154893763 - Seoul Economic Daily (refiner losses & ₩4.2 trillion compensation reserve, May 3, 2026) — https://en.sedaily.com/news/2026/05/03/korean-refiners-brace-for-losses-despite-5-trillion-won-q1 - Seoul Economic Daily (cap extension, May 7, 2026) — https://en.sedaily.com/finance/2026/05/07/korea-extends-fuel-price-cap-for-fifth-time-refiner - Seoul Economic Daily (cap revival, March 6, 2026) — https://en.sedaily.com/finance/2026/03/06/korea-revives-30-year-old-oil-price-cap-law-amid-inflation - UPI (S-Oil Q1 returns to profitability) — https://www.upi.com/Top_News/World-News/2026/05/11/S-Oil-returns-to-profitability-in-first-quarter/8651778523846/ - Kyunghyang Shinmun — https://www.khan.co.kr/en/article/202605111832067/

By LineVest Markets Desk — May 12, 2026

This article is for informational purposes only and does not constitute investment advice.