Good morning, everyone. This is Katie Kang, the Treasurer of S-Oil. I would like to extend my gratitude to our investors and analysts in and out of Korea for your attention to S-Oil's conference call for Q4 earnings results. Today, we have our CFO, JW Bang, IR team leader, JW An, and team members. First, I will take you through the highlights of our fourth quarter results. Despite one-off inventory-related loss caused by oil price decrease and bearish refining margin, the company recorded KRW 209.8 billion in Q4 net income, thanks to FX gains through organized FX risk management and investment tax credit from Shaheen Project. On a yearly basis, operating income and net income posted KRW 1.4186 trillion and KRW 998.2 billion respectively. Next is the market outlook for 2024. The company expects favorable market fundamentals to continue into 2024 for overall refining business. As for refining business, oil demand is forecast to grow steadily this year. According to major institutions' outlook, transportation fuel, mainly gasoline and jet fuel, will lead strong demand growth supported by reduced price pressure on consumers with the decline in international oil price. The company's major petrochemical product, PX, is expected to experience improved market fundamentals as large-scale capacity expansion, mainly led by China, was mostly completed in 2023, adding significantly less new capacity this year. High supply condition is projected for lube business, as no capacity addition that is able to affect global market is scheduled for 2024. As such, we are expecting consistently high complex margin above the pre-pandemic level in 2024. In particular, there will be far less T&I this year as we completed regular T&I for major units over the past two years. Next is about decarbonization roadmap of the company. Aligned with global and nationwide efforts to deal with climate change and reduce carbon emission, we set the target to deliver 35% of carbon reduction against business as usual by 2030 and net zero by 2050. To this end, we established the decarbonization roadmap, including concrete initiatives and annual pathway to decarbonization, which we are putting into action. This is regularly updated and is reported to BOD as one of the company's key business agendas. The roadmap includes specific carbon abatement initiatives, such as energy efficiency improvement for existing facilities, low carbon electricity purchase, and steam import. These are implemented in phase based on economics and feasibility, allowing the company to make visible progress for decarbonization every year. Going forward, S-Oil will continue to put all our efforts as a clean energy and chemical company to enhance ESG management system, thereby live up to the expectations of domestic and overseas investors. Team leader JW An will get into more details for Q4 performance with the following slides. Good morning. I am JW An, the leader of IR team. Before we begin, please be noted that Q4 financial results are provisional and subject to change according to independent external auditors' audit results. Let me begin with Q4 2023 performance and outlook. Please refer to page five for Q4 2023 financial results. The company achieved KRW 9.8 trillion of revenue in Q4, up by 9.2% from the previous quarter due to the increase in sales volume compared to Q3, as regular T&I of several units was completed early in Q3. Q4 operating income stood at KRW 7.6 billion. We had one of negative inventory-related impact and lagged margin due to oil price drop. For your reference, inventory-related loss of KRW 144 billion was reflected to the company-wide operating income in Q4. By business segment, refining business turned to loss due to slight downward adjustment in refining margin, in addition to oil price decrease. Petrochemical and lube segments saw their income rise compared to the previous quarter. In particular, the rebound in product spread pushed up operating income of lube business by 54% from the previous quarter. For finance and other income, we had KRW 162.3 billion of FX gain through effective FX risk management under downward trend in USD 1 rate. As a result, income before tax in Q4 recorded KRW 137.6 billion. Net income stood at KRW 209.8 billion, which was higher than income before tax. Reflecting KRW 96 billion of investment tax credit from investment into Shaheen Project. The company's cumulative operating income before tax, and net income for 2023 is KRW 1.4 trillion, KRW 1.1 trillion, and KRW 998.2 billion respectively. For your reference, the impact of regular T&I that the company conducted last year for major units on the full year operating income is -KRW 460 billion. Moving on to the company's financial status. Year-end cash balance for 2023 was KRW 1.974 trillion, up from the previous quarter due to reduced working capital caused by the decline in oil price. The debt-to-equity ratio as of the end of 2023 slightly fell year-on-year to 42.5%. Despite KRW 2 trillion of capital expenditure for Shaheen Project in 2023, healthy income generation and timely external financing at a competitive interest rate enabled us to maintain cash balance and financial structure at an appropriate and stable level. As for profitability indicators, ROE and ROCE stood at 11.4% and 9.8% respectively in 2023. Annual EBITDA recorded KRW 1.853 trillion. Let me move on to the performance and outlook for each business segment. First, refining business. In Q4, refining business recorded KRW 265.7 billion in operating loss. Regional refining margin inched down in Q4 from the previous quarter due to sluggish off-seasonal demand for transportation fuel and warmer than usual early winter weather. Low inventory level of global refining product supported the market. Average Dubai crude price dropped sharply from $93.3 per barrel in September to $77.3 per barrel in December, mostly offsetting the hike in the previous quarter due to increased output from non-OPEC countries led by the U.S. Extended output cut by OPEC+ and increased chances of SPR replenishment by the U.S. government limited a further decline in the market. As for 2024 outlook, we expect Asian refining margin to be maintained at a level higher than past average, driven by globally low inventory level and stable demand growth. After its decline in October, with the beginning of off-season for transportation fuel, Asian refining margin bottomed out in November and widened consecutively in December and January. For your reference, Singapore refining margin is maintained at a healthy level above $6 per barrel in January. In Q1, heating demand for the remaining winter, unplanned shutdown of global refineries caused by bad weather, spring regular T&I in the region, and demand uptick during China's Spring Festival are expected to support refining margin. Moreover, further expansion in the margin is projected during driving season in Northern Hemisphere and summer high season for travel, which start from Q2 end. New refining facilities in Nigeria and Mexico are starting up this year, but industry analysis points to uncertainties as to when they will settle into normal operation and how fast. Major institutions' outlook up to now shows that such facilities will have limited impact on the market in the second half and onwards. I would like to share further details and outlook in key business updates. Next is petrochemical business. Petrochemical business recorded KRW 47 billion in Q4 operating income, similar to the previous quarter, despite a slight drop in chemical product spread, resulting from the basic fact caused by opportunity loss from T&I in Q3. For aromatics, PX and benzene spread in Q4 remained firm, recording $356 and $230 per ton respectively, despite their fall from the previous quarter. Though seasonal slowdown in gasoline blending demand put downward pressure on the market, demand uptick from the start-up of a new PTA facility and high operation rate of downstream polyester facilities in China supported the market. In 2024, demand growth is anticipated to continue amid a significant reduction in new PX and benzene capacity addition. PX consuming PTA facilities in China are planned to go through large-scale capacity expansion, and gasoline blend demand is also expected to maintain. As for olefin downstream, PP and PO market weakened in Q4 with narrowing spread due to dwindling demand in derivatives and minimized restocking of downstream customers at the end of the year amid slowing Chinese economy. Such weak sentiment is expected to continue into 2024, with capacity expansion led by China. Chances of gradual recovery also exist, aligned with the pace of Chinese economic recovery that will affect the demand of petrochemical products. Turning into lube business. Operating income of lube business in Q4 recorded KRW 226.2 billion, up by 54% compared to Q3. Whole year operating income in 2023 stood at KRW 815.7 billion, continuing its great contribution to the company's overall income. In Q4, LBO spread improved from the previous quarter thanks to regional demand recovery after off-season, with the end of monsoon in India, while feedstock price adjusted downward in correspondence to fall in oil price. In 2024, LBO market is forecast to remain firm, driven by continuous demand growth for Group II and III premium product, with no meaningful capacity expansion. Usual demand upturn during spring lubricant change season is also expected to revive the bullish sentiment in the market. Now, we would like to give updates on our key business. First, strong market fundamentals in 2024. As for refining business, global oil demand growth outlook for this year ranges between 1.1 million and 2 million BD, which is stable given its average from 1.5 million to 1.6 million BD. On demand side, continuous bullish demand for transportation fuel is forecast to drive stable growth in Asia, including China, India, and Southeast Asia, as well as the Middle East and North America. As for gasoline, we anticipate international oil price, which sidelined since its fall in Q4 last year, to put less fuel cost burden on consumers, thereby supporting gasoline demand. Jet fuel demand, which recovered to 90% of a pre-pandemic level at the end of 2023, is also projected to continue such a trend into this year. On supply side, net capacity addition is projected at 800,000 BD to 1 million BD in 2024. This comes with a limited direct impact on the market, according to major institutions, as there remain uncertainties with the timing for commercial operation and ramp up. The 650,000 BD refinery in Nigeria that is known to have started up the CDU in the beginning of this year, is the largest one this year. As new operation of a refining facility begins gradually and consecutively in the long term, it takes minimum 15 months and up to 2 years to settle into normal operation from its initial feed-in, as was witnessed in the recent cases. Considering the situation, major institutions presume the new facility will only affect the market from the second half or afterwards. Next is supply-demand outlook for PX, that accounts for the largest portion in the company's petrochemical product portfolio. PX market also experienced a large capacity expansion led by China over the past few years. Despite 9,600 kta of capacity addition, which was the largest since 2006, spread of a PX over naphtha remained firm, averaging at $389 in 2023, driven by strong gasoline blending demand for feedstock aromatics. In 2024, major capacity expansion will come to an end, and annual demand growth will naturally outpace capacity addition, such is projected to address supply glut in the region. PX market sentiment is anticipated to improve from 2023, driven by steady growth in gasoline blending demand and larger scale capacity expansion of PTA facilities, which amounts to 9 million tons. LBO market condition is also forecast to remain strong as there is no scheduled capacity addition that may affect the market condition. Moreover, major LBO producers plan to have a regular T&I in the first half. Once realized, demand uptake from spring lubricant change season is expected to put upward pressure on spread, resulting in bullish market sentiment. Next is decarbonization roadmap of the company. We established a quantitative target of a 35% reduction in carbon emission against the business as usual by 2030, based on our mid to long-term business operation plan and NDC scenario. In the long term, we set net zero in 2050 as our way forward. This comprehensive roadmap includes a specific reduction pathway based on estimated future carbon emission, required reduction amount, and cost-effective emission initiatives to achieve the target. This is updated on a regular basis, considering the company's mid to long-term strategy and the changes to external business environment, including global policy trend and development of a carbon abatement technology. We came up with specific initiatives to achieve the roadmap, which we are implementing in phase based on priority with consideration into feasibility, including technical maturity and economics. We have five major initiatives to achieve decarbonization, which are operational levers, low carbon utility, clean hydrogen import, CCUS, and carbon credit. Under these initiatives, the company is going after heater efficiency improvements, waste heat recovery, and process heat integration for refinery energy efficiency. Second, low carbon utilities such as gas turbine cogeneration to reduce carbon intensity of electricity, steam and water used for engineering process, import of low carbon steam, and solar power generation facility. Lastly, external hydrogen import, sales of CO2 for industrial use, and overseas CDM project to reduce global GHG emissions. According to estimated contribution by each initiative, operational lever, and low carbon utility that come with feasibility and economics compared to other initiatives, will allow us to achieve over 70% of a total planned reduction target by 2030. Such efforts made by the company are resulting in meaningful progress every year as we achieved 249 kta of carbon abatement from 36 action items in 2023. 34 items in operational levers, including energy efficiency improvements, were also completed. Solar power generation panel is installed at the idle space of Incheon Terminal to secure eco-friendly energy. In addition, the company is cooperating with Dongguan Chemical, which manufactures carbon products such as liquid carbon for beverage and dry ice, as a result of capturing and utilizing 100 kta of CO2 from our hydrogen production process since 2016. Last year, we expanded captured volume of CO2 to 200 kta. To better implement decarbonization roadmap, we monitor the status of facility investment and emission for carbon abatement regularly under the greenhouse gas reduction target we set as part of core performance indicators to achieve mid to long-term vision. Results are reflected to performance evaluation of all officers and team leaders. We will continue to share the status and our efforts for decarbonization with the market on a regular basis. With this, I'd like to wrap up my presentation. Thank you. The Korean presentation is still ongoing. Allow us to wait for a brief moment. Thank you. Q&A session will start soon. Please wait for a brief moment. Thank you. 그럼 지금부터 질의응답을 시작하겠습니다. 질문이 있으신 분들은 전화기 버튼의 *과 1번을 눌러주십시오. 신청하신 질문을 취소하시려면 *와 2번을 눌러주시면 됩니다. Q&A session will begin. Please press *1, * and 1 if you have any questions. For cancellation, please press *2. That is * and 2 on your phone. 처음으로 질문해 주실 분은 신한투자증권의 이진명 님입니다. 질문해 주십시오. The first question will be given by 이진명 from Shinhan Investment Securities. Please go ahead. 네, 안녕하세요. 신한투자증권 이진명 연구원입니다. 먼저 질문 기회 주셔서 감사드리고요. 저는 세 가지 질문드리도록 하겠습니다. 먼저 첫 번째 질문은 중국의 올해 수출 쿼터 예상 물량이 어느 정도 되는지 말씀해 주시고, 이에 따른 역내 수급 영향에 대해서 말씀해 주시면 감사하겠습니다. 두 번째 질문은 전체 사업 재고 관련 효과는 말씀해 주셨는데 사업부별 재고 관련 손익 브레이크다운 해주시면 감사하겠습니다. 그리고 마지막 질문은 최근에 이번 주부터 금융위에서 밸류업 프로그램 기대감이 높아지고 있는 상황인데, 저 PBR 이런 기업 가치 상승을 위해서 배당 상향 조정이나 주주환원 정책 등 관련된 대응 방안을 마련하고 계신지 말씀해 주시면 감사하겠습니다. Good morning. I am JM Lee from Shinhan Investment Securities. Thank you for the opportunity to pose questions. I have three questions. First is, what is S-Oil's estimated export quota from China? How do you think this will affect the overall regional supply and demand in 2024? The second question is you have shared with us the inventory evaluation for last year. Could you break that down into the business segments? Third is, recently the South Korean government's Financial Services Commission introduced the corporate value program. Given the fact that your company's PBR is not very high, do you have any policies to promote the return to the shareholders other than the dividend policy? 첫 번째 질문 주신 중국 경질유 수출 쿼터 부여 관련한 답변 드리도록 하겠습니다. 작년 12월 말 중국 상무부는 경질유에 대한 2024년 1차 수출 쿼터를 1,900만 톤 규모로 발행했는데, 이는 2023년 1차 수출 쿼터였던 1,899만 톤과 동일한 수준입니다. 이에 대해 분석 기관들은 수출 물량 통제를 통한 정유 산업 효율화와 수출을 통한 경제 성장 사이의 균형을 고려한 결정으로 해석하여 중국의 2024년 총 수출 쿼터 부여 물량도 2023년도 부여 물량인 약 4,000만 톤과 유사한 수준일 것으로 예상되고 있습니다. To answer your first question on China's light oil export quota. At the end of last year, China announced its first export quota for 2024 for the light oil, which amounted to 19 million tons, which is almost the same as 18.99 million tons that was issued as the first export quota in year 2023. Many institutions interpret this as the efforts by the Chinese government to strike a balance between keeping the refining industry efficient by controlling the export volume and driving up the Chinese economy through the exports. Under the situation, the Chinese government is expected to have a total of 40 million tons in export volume for this year, which will not be very different from the previous years. 다만 1차 수출 쿼터 부여에도 불구하고 단기적인 수출 물량의 증가폭은 제한적일 것으로 예상됩니다. 2월 중국의 춘절 연휴 전 재고 비축 수요와 4월에서 5월에 예정된 200만 BD 규모의 국영 정유사 정기 보수로 인해 상반기 수출 가능 물량이 제한될 것으로 예상되기 때문입니다. 다만 실제 중국의 수출 물량은 중국의 내수 수요 강도 및 유종별 수출 경제성 등에 따라 유동적일 것으로 보입니다. However, in the short term, we are not expecting a big spike in the export volume by China because of a few reasons. First of all, there is a demand to stockpile inventory in advance of the upcoming China Lunar New Year holidays, and there's also scheduled 2 million BD regular T&I sometime around April and May. However, there is a subject to some changes depending on the export economics and the degree of demand in domestic China market. 네, 두 번째로 질문 주신 재고 관련 효과 관련해서 부문별로 말씀드리겠습니다. 방금 본문 발표에서도 말씀드렸듯이 4분기 전체 재고 관련 효과는 -1,440억 원입니다. 이를 부문별로 보면 대략적으로 정유 부문 -1,520억 원, 석유화학 부문 -30억 원, 윤활기유 부문 +110억 원 수준입니다. 참고로 2023년 연간 기준으로 보면 총 재고 관련 효과는 -980억 원 수준으로 정유 부문이 -860억 원, 석유화학 부문이 +90억 원, 윤활유 부문이 -210억 원입니다. As for the inventory impact, in Q4, the total inventory valuation was a total of -KRW 144 billion across all three business segments. If I may break it down into by each business segment, it was -KRW 152 billion for the refining business, -KRW 3 billion for the petrochemical business, and +KRW 11 billion for the Lube Base Oil business. If you look at the whole year of 2023, the inventory valuation stood at -KRW 98 billion, of which -KRW 86 billion was in the refining business, +KRW 9 billion in petrochemicals, and -KRW 21 billion in Lube Base Oil. 세 번째, 기업 밸류업 프로그램과 관련해서 질문을 주셨는데요. 회사는 주주 가치 향상을 기업 경영의 최우선 목표로 삼아서 회사의 중장기 전략 수립이나 주주 환원 정책에 반영하고 있습니다. 따라서 회사는 정부의 기업 밸류업 프로그램의 정책적 취지에 적극적으로 공감하고 있습니다. Thank you. As your third question on the corporate value program introduced by Financial Services Commission. We always put improving the shareholder value as one of our top priorities, and this is always reflected as a priority in running the business. We always reflected when we set the mid to long-term business strategies and also in our shareholder return policy. We fully share the government's policy intention, and we fully support it. 우리 회사는 탁월한 경쟁력을 바탕으로 경쟁사 대비 높은 자기자본 수익률을 기록하고 있으며, 중장기적인 기업 가치 향상을 위해서 2026년 상반기를 목표로 Shaheen 프로젝트를 수행 중에 있습니다. We have a higher return on equity compared to our competitors, which is also an indicator of our competitive edge. In order to boost the company's own corporate value in the mid to long term, we are in the middle of the Shaheen Project with target completion at the first half of 2026. 아울러 주주 가치 보호를 위해서 대규모 프로젝트가 진행 중임에도 불구하고 금년과 내년 회계연도에 대한 배당 성향을 당기순이익의 20% 이상으로 유지하기로 하였습니다. 또한 본 프로젝트가 완료되거나, 본 프로젝트의 투자재원 확보가 일정 부분 마무리된 이후에는 투자 기간 중이라도 배당 성향을 다시 상향할 수 있을 것입니다. Even though we are in the middle of a very big project, the Shaheen Project, we have made it a guideline to maintain our dividend payout ratio at 20% or higher of the net income for fiscal year 2024 and 2025 in order to protect the shareholder value. Once the project is over, or even during the project execution period when we have secured enough a certain level of capital needed to invest in the project, we can raise the company's dividend payout ratio. Shaheen 프로젝트가 완공되고 나면 회사의 이익 창출 능력이 획기적으로 확대되기 때문에 보다 적극적인 주주 환원 정책을 전개할 수 있을 것이라고 봅니다. 기업 밸류업 프로그램의 구체적인 내용이 조만간 정부에서 발표가 되면, 그 기간 중이라도 회사는 필요한 경우 이에 부합하는 대응 방안을 마련할 예정입니다. After Shaheen Project, the company's capability and income creation will be much, much bigger, and therefore we will be more aggressive in the company's shareholder return policy. Once the government comes up with all the details around the corporate value-up program, we will look at them, and we will make proper responses to those new policies. 이상으로 답변을 마치겠습니다. I hope I answered your question. 다음으로 질문해 주실 분은 삼성증권의 조현열 님입니다. 질문해 주십시오. The following question is by Jo Hyun-yeol from Samsung Securities. Please go ahead. 네, 안녕하세요. 삼성증권 조현열입니다. 우선 질문해 주셔서 감사드립니다. 크게 세 가지 질문드리려고 하고요. 첫째로는 일단 2024년 동절기 난방용 연료 수요 현황이 어떠한지와 올해 등유 경유 마진 전망에 대해서 구체적인 답변 부탁드리겠습니다. 두 번째는 파나마 운하랑 홍해 물류 이슈가 있는데요. 이게 지금 회사 실적에 미치는 영향이 어떠한지에 대해서 공유해 주시면 감사드리겠습니다. 그리고 마지막 세 번째는 최근에 바이오 연료랑 폐플라스틱 열분해유의 초동 물량을 정유 공장에 투입했다고 알고 있는데, 전용 공장 구축이라든지 좀 더 향후에 보다 구체적인 사업 계획이 어떻게 될지에 대해서 공유해 주시면 감사드리겠습니다. 감사합니다. I am from Samsung Securities. Thank you for the opportunity to pose questions. I have three questions. First of all, I would like to know your estimation for the heating fuel demand in the winter season 2024, and what is your outlook on the diesel and kerosene margin for this year. Second question is, as you know, there are some supply logistics of disruptions in Panama Canal and the Red Sea. How is this affecting S-Oil's performance? Third question is, I understand that S-Oil recently started the initial feed in of the bio feedstock and the waste plastic pyrolysis oil into your refining process. Could you please share with us any concrete business plan around this initiative or whether you have any plans to build a dedicated plant? 먼저 동절기 난방유 수요에 대해서 질문 주셨습니다. 이에 대해서 답변드리겠습니다. 북반구 초겨울 날씨가 다소 온화하였기 때문에 2023년 12월까지는 난방유 수요가 다소 부진한 양상을 보인 것으로 파악됩니다. 특히 난방유 수요를 가늠할 수 있는 지표인 난방도일, 즉 Heating Degree Days가 유럽 일부 국가에서 전년 대비 약 20% 감소하였고, 미국 또한 난방도일이 전년 대비 20% 이상 감소하여 난방유 수요도 유사한 흐름을 보였을 것으로 추측되고 있습니다. To answer your first question about the heating fuel demand in 2024 winter season. As you know, in December 2023, the temperature in the northern hemisphere was higher than we thought. As a result of that, in December 2023, the heating fuel demand was rather disappointing. There is an indicator that can be a good barometer for heating fuel demand, which is called the Heating Degree Days. This went down by 20% in Europe compared to the previous year. It was also the same in the U.S., where it also went down by the same level, which means the demand for heating fuel also moved down at pretty much the similar level. 그러나 1월 들어서는 북반구 기온이 급격하게 하락하면서 1월 및 2월 미국 동부, 유럽 지역 및 일본 등 북반구 내 주요 난방유 수요처의 Heating Degree Days 지표가 전년 대비 10~20%가량 증가할 것으로 전망되고 있습니다. 이에 잔여 동절기 기간 동안의 난방유 수요가 정제 마진을 지지해 주는 주요한 요인 중 하나가 될 것으로 전망하고 있습니다. Things turned around in January 2024, where the U.S. East Coast, Japan, and Europe were hit with a cold snap in January and also starting in February 2024. As a result of that, we're estimating the Heating Degree Days in these regions to have increased by 10%-20%. If this remains the same during the remaining period, this will be the factor supporting the refining margin. 그리고 디젤 및 항공유·등유의 금년도 시장 전망에 대해서도 간략히 덧붙여 말씀드리겠습니다. 2024년도에 디젤은 우선 동절기 한파 영향으로 인한 난방유 수요, 그다음 유럽 내 동절기용 디젤의 낮은 재고 수준, 또 아시아 및 중동 지역에서 전년과 유사하거나 전년을 초과한 규모로 계획되어 있는 봄철 정기 보수 등으로 견조한 시장 시작을 보일 것으로 예상됩니다. 다만 이후에는 계절적 흐름에 따라 소폭의 조정의 여지가 있을 것으로 보입니다. As for the market outlook for diesel, jet fuel and kerosene 2024. In 2024, because of the low inventory in Europe and the cold snap, which affected the heating fuel demand in the winter season 2024, and the spring regular T&I in Asia and the Middle East, which is estimated to be similar to 2023, or even more than that, are expected to support the diesel spread 2024. There may be some slight adjustments as we move on due to seasonality. 항공유 및 등유의 경우에도 동절기 기온 하락 영향으로 인한 난방유 수요가 1차적으로 스프레드를 지지할 것으로 보이고, 중국을 중심으로 한 항공유 수요의 성장이 연중 제품 스프레드를 지속 지지할 것으로 전망됩니다. 2020년도 말 글로벌 항공유 등유의 수요는 팬데믹 이전 대비 한 90%까지 회복을 기록했습니다. 기관들 전망에 따르면 2024년과 25년까지 순차적으로 팬데믹 수준을 회복할 것으로 전망되는 만큼, 추가적인 회복의 여지가 남아있다고 말씀드리겠습니다. As for the market outlook for jet and turbo, the spread will be supported by the high heating fuel demand early 2024 because of the low temperature and because of the recovery of jet fuel demand in China. This will be another factor that will be supporting the spread throughout the year. The jet turbo recovered to almost 90% of the pre-pandemic level in 2023, and it is expected to go higher at the end of 2024 and at the end of 2025. 네, 두 번째 질문에 대해서 답변드리겠습니다. 우선 홍해 지역의 위험 관련해서 답변드리겠습니다. 당사의 경우, 원유의 약 95% 이상이 사우디아라비아 동부에서 호르무즈 해협을 거쳐 도입되고 있어 원유 수급에는 전혀 문제가 없는 상황입니다. 홍해를 통해 도입하는 일부 스팟 원유 또한 희망봉 우회를 선택하여 직접적인 리스크에 대해서 대응하고 있습니다. 운임의 증가는 전체 원유 도입 규모를 고려했을 때 매우 미미한 수준에 불과합니다. 제품 수출의 경우도 주로 역내에서 대부분 이루어지고 있기 때문에 홍해 이슈에 대해서는 당사에 직접적인 영향은 없습니다. As for the geopolitical tensions around the Red Sea, about 90% of our crude import passes through the Hormuz Strait and leaves the eastern part of Saudi Arabia and then passes through the Hormuz Strait. We have zero risk around the Red Sea issue. There is some spot volume that is passing through the Red Sea, but we're responding this through a detour around the Cape of Good Hope. The increase in the freight rate due to this is very minimal and negligible compared to the amount of crude that we import. As for our product export, most of the export takes place within the region, which means there is no impact on our business and our exports because of the Red Sea risk. 네, 파나마 운하의 경우에는 당사에 직접적인 영향은 없는데요. 파나마 운하의 경우는 주로 브라질 남미에 대한 수출 및 미 서부에 대한 수출에 대해서 영향을 주고 있는데, 아시아 이외 지역에서 브라질향 수출 물량, 미 서부 수출 물량에 대해서 운임에 높은 프리미엄이 발생하고 있어서 가격을 낮춰야 하는 상황이 발생하고 있습니다. 따라서 오히려 아시아 지역 정유사들이 미 서부 지역 및 남미 수출에 어느 정도 유리한 국면이 전개될 수도 있습니다. As for the disruptions in Panama Canal, we have no impact as a result of this. As you know, this is impacting the exports to Brazil and parts of South America and also the U.S. West Coast. When there are product exports outside of Asia and bound for Brazil and the U.S. West Coast, they have to pay a high freight rate premium. As a result of this, the price has to go down. We believe this could be an opportunity for the Asian refineries in terms of exporting to South America and the U.S. West Coast. 세 번째, 재생 연료 관련된 사업에 대해서 질문하셨습니다. 회사는 에너지 전환에 대비한 그린 이니셔티브 전략의 일환으로 바이오 원료 및 플라스틱 열분해유를 활용해서 친환경 퓨어 오일과 석유화학 제품을 생산하는 사업을 추진 중에 있습니다. The third question was about the renewable fuel. As part of S-Oil's green initiatives, in order to respond to the energy transition, we have a plan to utilize the bio feedstock and the waste plastic pyrolysis oil to produce eco-friendly fuel oil and eco-friendly petrochemical products. 신속한 시장 진입을 위해서 기존 정유 공정에 바이오 원료와 폐플라스틱 열분해유를 투입하여 재생 연료와 친환경 화학 제품을 생산하는 co-processing을 시작하였습니다. 정부로부터 co-processing을 위한 규제 특례 승인을 획득하였고, 올해 1월 29일 바이오 원료 및 폐플라스틱 열분해유 초도 물량을 당사 공정에 투입하기 시작했습니다. In order to enter into the market with speed, we started the co-processing, which is about producing the renewable fuel and eco-friendly chemical products from the bio feedstock and waste plastic pyrolysis oil, which is treated into the existing refining process. We earned the government's regulatory sandbox approval for co-processing, and on January 29th, which is only a few years ago, we did the initial feed-in of the bio feedstock and the waste plastic pyrolysis oil into our process. 금년 중에 국제적으로 공신력 있는 친환경 제품 인증을 획득하고 친환경 제품의 판매를 본격화할 예정입니다. 향후 공정 영향성과 시장 상황 등을 종합적으로 고려해서 co-processing 물량을 점차 확대해 나갈 예정입니다. Our plan for this year is to acquire the international sustainability and carbon certification and sell the eco-friendly products in earnest. After that, we have plans to further increase the co-processing volume. Of course, this will be take with consideration into the impact on our processes and the market situation. 중장기적으로는 재생 연료 생산을 위한 별도의 설비 투자도 검토하고 있고, feasibility study를 거쳐서 구체적인 내용을 확정할 예정입니다. In the mid-to-long term, we are considering separate facilities investment to produce the renewable fuel, and the details will be confirmed after doing the feasibility study. 이상으로 답변 마치겠습니다. That answers your third question. 다음으로 질문해 주실 분은 KB증권의 전우제 님입니다. 질문해 주십시오. The following question is by 전우제 from KB Securities. Please go ahead. 네, 안녕하세요. KB증권 전우재입니다. 두 가지 질문인데요. 첫 번째는 샤힌 프로젝트를 포함한 2024년도, 2025년도, 2026년도 CAPEX 계획이고요. 그다음에 이번 실적부터 투자 세액 공제 혜택이 눈에 띄는데 이게 샤힌 프로젝트가 진행되는 동안 계속 저희가 분기별로 혹은 연간으로 인식할 수 있는 건지, 혹은 얼마나 인식할 수 있는 건지가 궁금합니다. 두 번째 질문은 4분기에 발생한 일회성 비용이라고 볼 수 있는 것들 중에서 대고효과 1,440억 말씀해 주셨는데요. 이 외에도 아마 유가 래깅 효과라든가 정기 보수 같은 다른 일회성 비용이 있었으면 공유 부탁드리겠습니다. 감사합니다. I am from KB Securities, and I have two questions. First is about Shaheen Project. Could you share with us the CAPEX for 2024 through 2026? One interesting thing that captured my attention this time was the investment tax credit. Will this be communicated going forward on a quarterly or on an annual basis? Could you also tell us the rough amount of the investment tax credit? My second question has to do with the one-off cost. You said there was about KRW 144 billion in inventory loss in Q4. Is there any other one-off factors like the crude lagging impact or the T&I? 네, 첫 번째 자본지출 규모와 또 관련된 투자세액 공제 효과에 대해서 질문하셨습니다. 우선 회사는 지금 Shaheen Project 기간 중에는 Shaheen Project에 모든 역량을 집중하기 위해서 기타 투자는 최소화해서 운영할 계획입니다. Shaheen Project 투자 금액과 관련해서는 회사가 2023년 말까지 약 1조 6,500억원 정도 집행을 했고요. 금년도 프로젝트 관련 CAPEX 예산은 약 2조 7,000억원 수준입니다. 나머지는 2025년에서 2026년에 걸쳐서 집행될 예정입니다. Your first question has to do with the CAPEX for Shaheen Project and also the investment tax credit and its impact. In order for the company to mobilize all our resources and capabilities into this mega project, we have plans to minimize other investments to minimum. As of the end of last year, our total CAPEX into Shaheen was KRW 1.65 trillion. For this year, we're planning KRW 2.7 trillion, and the rest will be executed in 2025 and 2026. 계획된 투자 기준으로 하고 현재 유효한 세법상 규정을 적용하면 2024년도에 회사가 향유하게 될 투자세액 공제는 약 600억원 수준이 되고요. 그다음에 2025년과 2026년에는 약 800억원 정도의 투자세액 공제를 향유할 수 있습니다. 이에 더하여 정부에서는 임시 투자세액 공제, 즉 지난해 말에 만료된 임시 투자세액 공제를 금년 말까지 연장하는 방안을 정하고 금년 중에 국회의 승인을 받을 예정입니다. 이 경우 금년도 투자세액 공제는 600억원에서 1,700억원 정도로 증가될 예정입니다. 이러한 투자세액 공제는 법인세 비용을 감소시킴으로써 당기 손익에 반영될 예정입니다. As for the investment tax credit, according to the regulations in the tax law, and assuming that our CAPEX will remain the same, our estimated tax credit for this year will be KRW 60 billion and KRW 80 billion for 2025 and 2026 respectively. However, the government has plans to extend the temporary investment tax credit, which was supposed to expire at the end of last year, and they have plans to have this put on for passage at the National Assembly this year. If this goes through the National Assembly, the investment tax credit will go up from KRW 60 billion to KRW 170 billion for this year, which means there will be savings in the corporate tax and this will be reflected in the company's income. 네, 다음은 래깅 효과 및 일회성 비용에 대해서 질문 주셨습니다. 유가 하락에 따라 그 재고 관련 손실과 함께 래깅 효과가 부정적 일회성 요인으로 당사 손익에 발생하였습니다. -1,440억 원의 재고 효과와 부정적인 래깅 효과를 제외한 본원적 영업이익은 여전히 준수한 수준입니다. 다만 이 래깅 효과의 정확한 수치는 이 자리에서 공유해 드리기는 어렵습니다. As for the lagging impact, which was the one-off impact resulting from the decline in the oil price. If you take out the minus KRW 144 billion in inventory valuation loss and the lagging impact, even if you take that out, we still maintained a positive operating income in Q4. Please take that into consideration. Please bear with us that we're not able to share the lagging impact resulting from the bearish crude oil price. 정기 보수 효과는 특별히 4분기에 발생하지 않았습니다. 답변 마치겠습니다. There was no one-off impact from the regular T&I in Q4. This is the end of my answer. 다음으로 질문해 주실 분은 JP Morgan의 Parsley Ong 님입니다. 질문해 주십시오. The following question is by Parsley Ong from JP Morgan. Please go ahead. Questions. I have two questions. Earlier, you mentioned that you have pretty heavy CapEx, therefore it's a bit difficult to do immediate share buyback or hike dividends in lieu of the Korea Corporate Value-up Program. Could you share with us your thoughts on what kind of financial metrics, for example, what 2024 OP level or net debt to equity or asset liability ratio would make S-Oil comfortable to hike the dividend payout ratio to, let's say, 30% or 40%, or maybe even 50% in 2025 onwards. Second question is for your lubricants. You had a pretty strong spread in the fourth quarter. I think part of that was probably due to the cheaper feedstock cost, which is related a little to the oil price decline, I believe. You mentioned a robust 2024 outlook, could you share with us your outlook on first quarter, given oil prices are significantly higher? Also, what is your outlook on lubricants in 2025 and beyond? Thank you. 두 가지 질문이 있습니다. CAPEX 때문에 자사주 매입이나 배당성향 증가 같은 것들은 고려하지 않으신다고 말씀을 하셨는데, 혹여나 향후에 S-Oil이 배당성향을 30에서 40 또는 50%까지 올리게 된다면, 그 올릴 수 있는 근거가 순부채비율이 된다고 할 경우에 어느 정도의 순부채비율을 가정했을 때 그 정도의 배당성향을 올리실 수 있는지를 알고 싶고요. 두 번째 질문은 LBO 스프레드가 4사분기에 피드스톡이 저렴해서 상당히 좋았습니다. 근데 올해 1분기 같은 경우에는 유가가 4사분기보다는 증가가 된 경향이 있어서 1분기는 어떻게 전망을 하시는지, 그리고 2025년과 2026년 윤활유 전망도 함께 듣고 싶습니다. 첫 번째 질문에 대해서 답변드리겠습니다. 우선 주주가치, 기업가치를 최대화하는 방법은 회사의 자본을 효율적으로 활용해서 이익을 최대화하는 길이라고 회사는 믿고 있습니다. 그를 통해서 적절한 shareholder return을 시행할 수 있을 것입니다. To answer your first question, I think the best way to maximize the shareholder value is to make the most efficient use of our equity in order to maximize the company's income. This is one of the ways to maximize return to the shareholders. 현재 회사에서는 수익을 최대화하기 위해서 Shaheen 프로젝트를 진행하고 있고요. Shaheen 프로젝트 기간 중에도 회사가 적절한 수준의 재무 안정성을 유지할 계획입니다. In order to maximize the company's income, we are executing Shaheen Project, and during the execution period, we are going to maintain the company's financial stability. 투자 기간 중에 회사의 cash flow를 maximize 하기 위해서 회사는 이익을 최대화할 수 있도록 운영 효율성을 제고를 동시에 추진하고 있습니다. 다만 operating income에 대한 것은 회사가 최대화하기 위해서 노력하겠지만, 시장 영향에 따라서 fluctuation이 가능하기 때문에 회사는 주어진 시장 환경하에서 이익을 최대화하기 위해서 노력하고 있습니다. We are trying to enhance the company's operational efficiency in order to maximize the cash flow and the income during the investment period. As for the operating income, of course, we're trying our best to maximize it, but it is affected by some market volatilities. Even so, under such a volatile market conditions, we're trying our best to maximize the operating income as well. 그리고 회사가 optimum target DE ratio를 관리하고 있는데요. 그 target ratio가 DE ratio 80%에서 100% 수준입니다. 그 수준에서 회사는 회사의 기업 가치가 최대화되는 수준이라고 보고 있습니다. 따라서 회사는 DE ratio 80%에서 100% 수준을 유지하면 향후 투자 기간 투자가 종료되거나, 투자 기간 투자 중에도 필요한 자본을 확보하고 난 뒤에 배당을 증액시킬 수 있을 것 같습니다. Our optimum target Debt-to-Equity ratio is set at 80%-100%, which we intentionally said because we believe this is the range that will allow us to maximize the corporate value. Once we meet this optimum target DE ratio, we can raise the dividend payout ratio after the project is over, or even during the project execution period when we believe we have secured enough capital for investment into the project. 다음은 윤활기유 시장의 전망에 대해서 질문 주셨는데 답변드리겠습니다. 2024년 전체적인 시황으로 보면, 봄철 윤활유 교체, 여름철 드라이빙 시즌 등 전통적인 성수기를 중심으로 한 지속적인 수요 증가랑, 신규 설비 증설은 제한되어 있기 때문에 이러한 수급 환경 속에서 견조한 시황이 전체적으로 유지될 것으로 전망하고 있습니다. As for the Lube Base Oil market outlook, if we look at the whole year of 2024, we believe that demand will grow particularly during the high season when there will be the lubricant change in the spring season and the summer driving season. At the same time, this will be coupled with the limited capacity expansion in 2024, which will keep this market strong and healthy. 24년 1분기는 아시아 일부 공급자들의 정기 보수로 공급이 감소하고, 전통적인 봄철 성수기에 따라 전분기 대비 시황이 개선될 것으로 전망하고 있습니다. We believe Q1 will be better than Q4 last year because supply will go down as some of the suppliers in Asia will go into the regular T&I. This will be at a time when we enter into the high spring season. 다만 원료 가격에 대한 lagging 효과에 대해서는 유가의 향후 움직임과 연동되어 있어 방향성을 말씀드리기는 어렵습니다. As for the lagging impact, the overall direction still remains quite uncertain because as you said, the feedstock is linked to the oil price. 윤활유 시장은 강화되는 환경 규제 및 고품질 윤활유에 대한 수요 증가에 따라서 Group II 및 Group III의 제품을 중심으로 지속적인 수요 증가가 예상되고 있습니다. With the tightening environmental regulations and growing demand for a high-quality Lube Base Oil, we are expecting higher demand for Group II and Group III going forward. 2025년 이후에 일부 설비 증설이 예정되어 있기는 하나, 현시점을 기준으로는 사업 가동 및 가동 안정화 시점을 정확히 예측하는 데 한계가 있고, 또 LBO 판매를 위한 formulation 개발에 들어가는 기간 등을 고려할 때 당분간은 이러한 윤활유 시장의 강세가 지속될 것으로 전망하고 있습니다. There will be some capacity additions from 2025. We are expecting this market to remain quite bullish for the time being, because even though there will be new capacities coming up in a few years, we're still limited in knowing when they will settle down and when they will go into full operation. There's also some time needed to develop the formulation for lube base oil. 이것으로 답변 마치겠습니다. That was my answer. 계획된 시간이 다 지난 것 같습니다. S-Oil에 대한 관심으로 오늘 실적 발표에 참여해 주신 투자자와 애널리스트 여러분들께 다시 한번 감사드립니다. 회사는 투명하고 공정한 소통을 위해 최선의 노력을 기울이겠습니다. 추가로 문의하실 내용이 있으시면 당사 IR팀으로 연락 주시기 바랍니다. 이것으로 오늘 실적 발표를 마치도록 하겠습니다. 감사합니다. Our scheduled time is up now, I think we have to close. Once again, I would like to thank all the investors and the analysts for showing your interest and attention to S-Oil. We are always so committed to communicating with the market based on transparency and fairness. If you have any further inquiries about the company and our business performance, please feel free to contact S-Oil's IR team. This closes the conference call for Q4 last year. Thank you very much. 바쁘신 중에도 참석해 주신 분들께 감사드리며, S-Oil의 2023년 4분기 실적 발표는 이것으로 마치겠습니다. 고맙습니다. This concludes the fiscal year 2023 fourth quarter earnings resulted by S-Oil. Thanks for the participation.