Ask Warren

Michang Oil IND

003650 · KOSPI · ₩003650 · 미창석유

₩115,900▼ ₩2,400 (2.03%)End-of-day · Oct 30, 2026 · End-of-day prices.
Trade
Alert me
SellBuy

Valuation model · Discounted cash flow (DCF)

We use a 5-year discounted cash flow: the value of the cash the business is expected to produce, in today's money.

Fair value per share

₩326,725

vs the current price (₩115,900)

Enterprise value
₩495B
Equity value
₩568B
WACC
7.3%

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

Why the model and the price differ

The model is 182% away from today's price. A gap this size usually means the market expects something the past figures don't show yet, or the model leaves something out. What we can see:

  • To match today's price of ₩115,900, the model needs an operating margin of 3.3% every year (it uses 9.6%).
  • 78% of the last 12 months' net profit came from outside operations (stakes in other companies, interest, one-offs). The model adds those stakes at book value but doesn't project that income.
  • Today's P/E is 1.6× against a typical 3.3× over the last 10 years.

Treat the model as a starting point: change the assumptions to the story you believe, and compare with the multiples check below.

Bear / Base / Bull

Bear
₩214,824
+85.4%
Base
₩326,725
+181.9%
Bull
₩522,730
+351.0%

Bear: revenue growth 3 points lower every year, EBIT margin 2 points lower, WACC 1 point higher. Bull: the opposite.

Assumptions

Sign in to change the assumptions and see the results update. Sign in

Cycle options

Margin path

Every year uses the cycle-average margin (9.6%).

Revenue growth

  • -1.1%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-1.1% a year, annual reports), fading to 3% by year 5.

  • -0.1%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-1.1% a year, annual reports), fading to 3% by year 5.

  • 1%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-1.1% a year, annual reports), fading to 3% by year 5.

  • 2%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-1.1% a year, annual reports), fading to 3% by year 5.

  • 3%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-1.1% a year, annual reports), fading to 3% by year 5.

Business

  • 9.6%

    Operating profit as a share of revenue.

    Default: through-the-cycle average of the last 12 months and the last 5 annual reports' operating margins.

  • 27.5%

    Share of operating profit paid as corporate tax.

    Default: Korea's top corporate tax rate (25%) plus 10% local income tax.

  • 0.5%

    The non-cash cost of wearing out equipment, added back to cash flow (% of revenue).

    Default: not in the statements, so 80% of capital spending (most spending replaces equipment that wears out).

  • 0.6%

    Money spent on factories, equipment, software and other long-term assets (% of revenue).

    Default: average of the last 3 annual reports (cash flow statements; equipment and intangibles).

  • 40%

    Stock and unpaid customer bills, less unpaid supplier bills, as a % of revenue. Each year's extra revenue ties up this much more cash.

    Default: working capital (current assets less cash and deposits, minus current liabilities other than borrowings) as a share of revenue, averaged over the last 3 years.

Discount rate

  • 2%

    How fast cash flows keep growing every year after year 5.

    Default: about Korea's long-run inflation plus real growth.

  • 4.01%

    Yield on Korea's 10-year government bond: the return with almost no risk.

    Default: Korea Treasury Bond 10-year yield on 2026-10-30.

  • 0.6

    How much the share moves when the market moves: 1 means just like the market.

    Default: 105 weeks of weekly returns against KOSPI (official index); raw beta 0.02, adjusted toward 1 and kept between 0.6 and 2.0.

  • 5.5%

    The extra return investors want for owning shares instead of bonds.

    Default: a typical premium for Korean shares.

  • 5.51%

    The interest rate the company would pay to borrow.

    Default: the 10-year yield plus a 1.5% credit spread.

Starting point

Revenue (TTM to H1 2026)
₩437B
Net debt (borrowings and leases − cash and deposits)
−₩31B
+ Stakes and investments
₩42B
Associates, long-term financial assets and deposits (book value)
Shares
1,739,672
Share price
₩115,900
Market cap
₩202B

TTM = trailing 12 months: the last four reported quarters added together. "TTM to H1 2026" is the 12 months up to the latest quarterly or half-year report (H1 = to the end of June). Year 1 grows from there.

Past years and projection

Grey columns are reported results from the annual reports (after-tax EBIT at the model's tax rate), so you can check the growth and margin assumptions against the past. Years 1–5 are the model.

FY2023FY2024FY2025Year 1Year 2Year 3Year 4Year 5
Revenue₩409B₩432B₩405B₩433B₩432B₩436B₩445B₩458B
Growth−2.3%5.5%−6.1%−1.1%−0.1%1.0%2.0%3.0%
EBIT₩48B₩46B₩35B₩42B₩41B₩42B₩43B₩44B
EBIT margin11.7%10.6%8.5%9.6%9.6%9.6%9.6%9.6%
After-tax EBIT₩35B₩33B₩25B₩30B₩30B₩30B₩31B₩32B
+ Depreciation———₩2.2B₩2.2B₩2.2B₩2.2B₩2.3B
− Capital spending₩824M₩4.9B₩2.5B₩2.6B₩2.6B₩2.6B₩2.7B₩2.8B
− Working capital₩15B₩86B₩18B−₩1.9B−₩173M₩1.7B₩3.5B₩5.3B
Free cash flow———₩32B₩30B₩28B₩27B₩26B
Discount factor———0.9320.8680.8090.7540.703
Present value———₩29B₩26B₩23B₩20B₩18B

Terminal value ₩538B, worth ₩378B today: 76% of enterprise value. It assumes spending settles at 110% of depreciation once growth slows to the terminal rate.

Cross-check: what the market has paid before

For cyclical businesses, analysts check a DCF against the multiples the stock has traded at through past cycles. Price / book is the usual anchor for them: P/E looks highest at the bottom of a cycle, when earnings are smallest, and lowest at the top. The price each band would give today:

LowTypicalHigh
Price / book (book value ₩330,953 a share)Now 0.35×₩122,4010.37×₩139,0390.42×₩161,7080.49×
Price / earnings (last 12 months: ₩70,773 a share)Now 1.64×₩169,1832.39×₩233,9583.31×₩383,7735.42×
P/E on run-rate earnings (Q2 2026 × 4: ₩182,563 a share)Now 0.63×₩436,4192.39×₩603,5103.31×₩989,9685.42×

Low, typical and high are the 10th percentile, middle and 90th percentile of month-end multiples since 2021, each against the latest report out by then, per share at today's share count; loss years and P/E above 100 are left out. Run-rate earnings are one quarter × 4, not a forecast. Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Sensitivity

Fair value per share as two inputs change; the middle is the current case.

WACC ↓ · Terminal growth →1.0%1.5%2.0%2.5%3.0%
6.3%₩351,454₩369,577₩391,817₩419,795₩456,113
6.8%₩324,767₩338,897₩355,888₩376,735₩402,956
7.3%₩302,317₩313,502₩326,725₩342,620₩362,120
7.8%₩283,171₩292,135₩302,580₩314,924₩329,761
8.3%₩266,650₩273,908₩282,259₩291,988₩303,484

Now (TTM)

Market cap
₩202B
Enterprise value
₩169B
P/E
1.6×
P/B
0.4×
P/S
0.5×
EV/EBITDA
—
Dividend yield
3.0%

Over time (at each year end)

20252024202320222021
Price₩121,700₩89,400₩71,700₩72,900₩79,000
Market cap₩212B₩156B₩125B₩127B₩137B
P/E3.1×3.0×2.5×6.1×4.5×
P/B0.4×0.4×0.4×0.4×0.5×
P/S0.5×0.4×0.3×0.3×0.3×
EV/EBITDA—————
Dividend yield2.9%3.4%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
Michang Oil IND1.6×0.4×0.5×—3.0%
SK Innovation—0.8×0.2×—0.0%
S-Oil9.1×1.4×0.4×—0.3%
Hankook Shell Oil13.1×5.5×1.9×—0.0%
Kukdong Oil & Chemicals10.0×0.5×0.1×—6.2%
Similar companies (median)10.0×1.1×0.3×—0.1%

Calculated from end-of-day prices and filed financial statements. Not a recommendation. This is not financial advice.

Also known as: Michang Oil IND / 미창석유 / 003650 / KRX:003650

Source: KRX statistical information