SOL Global Investments Corp.

In Q2 2023, SOL reported revenue of won78.196 trillion, down 13.9% sequentially, and operating income of won36.4 billion. Income before tax was a negative won33.8 billion, including won50.8 billion of FX-related loss; first-half operating income was won552.1 billion and income before tax was won321.1 billion. Inventory-related loss was won67.5 billion in Q2, with won77 billion in refining, minus won32 billion in petrochemicals, and plus won41 billion in lube base oil; T&I impact on Q2 income was roughly minus won256 billion, including minus won117 billion in refining, minus won58 billion in petrochemicals, and minus won81 billion in lube base oil. Cash balance was won1.956 trillion, net debt-to-equity was 45.8%, first-half ROE was 5.8%, ROCE was 5.9%, and EBITDA was won627 billion. For Shaheen, management said 30% of the CapEx, equivalent to won2.65 trillion, will be funded externally, with won780 billion from shareholder loan, won1 trillion from bank/facility loans, and won870 billion from corporate bonds, while 70% will be internally generated. For Q3, management said there is no scheduled T&I and expected profitability to improve as the company captures healthier complex refining margins.

The lead executive emphasized shareholder returns and said the company is using a conservative dividend framework because Shaheen requires large capital spending. He framed Shaheen as a long-term value-creation project, saying site preparation and EPC work are progressing smoothly and financing is moving forward as planned. Tone-wise, the message was cautious on near-term earnings but confident about project execution and the company’s ESG positioning.

CFO Ju-Wan Bang said the Q2 weakness was mainly timing-related: major T&I across refining and downstream units plus inventory losses and FX effects. He quantified the Q2 maintenance drag at minus won255.6 billion and the inventory hit at minus won67.5 billion, and said the company still held won1.956 trillion of cash while keeping net debt-to-equity at 45.8%. He also detailed Shaheen funding: 30% external and 70% internal, with external financing split among shareholder loan, bank/facility loans, and corporate bonds.

Analysts focused on whether SOL could raise its payout ratio beyond the stated 20% level, what financial metrics might trigger a larger dividend, and how lube margins and utilization would trend. Management said it could not give a concrete EBITDA or payout threshold, but if funding is secured and performance improves, the dividend policy could become more shareholder-friendly after considering 2024 results. On operations, management said Q2 and first-half turnarounds are now complete, there is no second-half T&I planned, and the company aims to maximize profitability by running assets to capture stronger margins.