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JONBUR Research · Update note

Socar · 403550 · Other

Socar: Model fair value estimate cut by 61% to ₩2,575 per share

Why this report

Written after:

  • Model fair value changeModel estimate of fair value moved -61% (₩6,673 → ₩2,575 per share)Oct 22, 2026

Our model estimate of Socar's base-case fair value fell 61%, from ₩6,673 to ₩2,575 per share, with the discount rate raised to 7.2% from 6.8%. The change is in the model only; no new filing explains it, and the share price of ₩10,200 now sits well above the base case.

Written Oct 21, 2026 · Data as of Oct 20, 2026 · 0 views

This is not financial advice. The report does not recommend buying or selling anything.

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What happened

On 2026-10-22 the model estimate moved. The base case went from ₩6,673 to ₩2,575 per share, a fall of 61.4% by our calculation from the rounded figures shown. The bear case moved from ₩1,000 to ₩0, and the bull case from ₩17,021 to ₩9,588.

The model is still a 5-year discounted cash flow based on trailing figures to H1 2026, but the discount rate is now 7.2% versus 6.8% in the previous report. No filings or news accompany this event, and no smaller recent events are listed as the cause. The reason for the larger fall beyond the rate change is not available in the data. Recent filings from late September and early October cover share cancellation, a buyback trust and its termination, and holder changes, but the data gives no details on them.

What it changes for the thesis

The previous report (2026-10-19) described improving operating results but persistent net losses and negative free cash flow. The trailing figures are unchanged: revenue of ₩458.7B, operating income of ₩28.2B (6.1% margin), net income of -₩15.4B and free cash flow of -₩62.4B. Liabilities are 209.7% of equity.

So the operating-improvement part of the thesis stands. The lower model value puts more weight on the other half of that thesis, namely that the data does not yet show a clean path from operating profit to net profit and cash generation. The model appears to give little credit to the current cash flow profile, which is consistent with the negative free cash flow.

What it changes for the valuation

The model now gives a bear / base / bull range of ₩0 / ₩2,575 / ₩9,588 per share, against ₩1,000 / ₩6,673 / ₩17,021 in the previous report. This is a model estimate based on the assumptions shown, not a target.

The share price was ₩10,200 on 2026-10-20, slightly above even the new bull case. Previously the price sat between base and bull. Price-to-book is 1.7 and price-to-sales 0.8, both modestly lower than the earlier 1.8 and 0.9 because of the lower price. Price-to-earnings and EV/EBITDA are not available. A bear case of zero and a bull case almost four times the base case show how sensitive the result is to cash flow assumptions and the discount rate.

Closing view

The event changes how the model reads Socar, not the underlying reported numbers. Operating profit has improved, but net losses, negative free cash flow and a leveraged balance sheet leave the model's cash flow-based value low and very wide. The market price is above every case in the model, which suggests investors are pricing in better cash generation than the trailing data shows, or that the model is conservative. Which of these is closer to the truth depends on whether operating gains turn into net profit and free cash flow, and the data does not yet settle that.

Model estimate of fair value

Bear
₩0
-100%
Base
₩2,575
-74%
Bull
₩9,588
-4%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Base case of the 5-year discounted cash flow model on the stock's Valuation tab (statements TTM to H1 2026; discount rate 7.2%). Bear and Bull move the main assumptions by fixed steps. See and change the assumptions

Filings and data used

Report history

  1. Oct 21, 2026Update noteModel fair value changeSocar: Model fair value estimate cut by 61% to ₩2,575 per share
  2. Oct 19, 2026InitiationStart of coverage (reader request)Socar: Operating profit turned positive, but net losses and a weak cash flow persist

Built only from jonbur's own data: prices and investor flows, filed financial statements and filings, and news headlines. Disclosed (filed) data is labelled as such. Written by AI and may contain mistakes.

This is not financial advice. The report does not recommend buying or selling anything.

Source: KRX statistical information