DB Securities announced on May 14 that it has raised the target price for GS to 95,000 won, reflecting improved performance expectations for the Abu Dhabi oil field due to increased drilling investments in the United Arab Emirates (UAE). The firm maintained its investment rating of 'buy.'
Han Seung-jae, a researcher at DB Securities, stated in a report that GS's market capitalization is still only 43% of Caltex's projected net assets of 15.5 trillion won for this year.
He noted, "While the inventory gains from the war are temporary, the lack of refining capacity is expected to persist in the long term, which indicates an increase in refining margins."
Han also highlighted that GS's operating profit for the first quarter of this year reached 1.26 trillion won, a 57% increase compared to the same period last year, surpassing market expectations. He attributed this strong performance to Caltex's operating profit of 1.6 trillion won.
He added that although refining margins have slowed down after a surge in March and April, they remain exceptionally strong. Considering the demand slowdown due to high oil prices and the operational disruptions in the Middle East (2-3 million barrels per day), the supply of refined products is expected to remain extremely tight.
Looking ahead, he projected that Caltex's operating profit for the second quarter would be 1.1 trillion won, continuing the positive trend. He also noted that due to rising oil prices and the UAE's exit from OPEC, production and net profits from the Abu Dhabi oil field are expected to increase, necessitating a reflection of this value in the market.
* This article has been translated by AI.
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