KUALA LUMPUR (May 1): It has been close to four years since the relisting of Lotte Chemical Titan Holding Bhd (LCT) on the local bourse.
Recall that a series of unfortunate events plagued LCT in 2017 before and after its relisting exercise, including an initial public offering (IPO) hiccup that saw its offer price slashed by one-fifth to RM6.50 from RM8 previously, as well as a sharp fall in earnings due to water supply disruptions at its Pasir Gudang plants.
Since then, its financial performance has been weak, with net profit falling to a low of RM154 million in 2020 against over RM1 billion in 2017.
But now, LCT is seeing some light at the end of the tunnel. It posted a net profit of RM440 million for the January-March 2021 period — its best quarterly results since the flotation of its shares on Bursa Malaysia, thanks to the rising polymer-naphtha spread trend.
Can the group sustain its earnings in the coming quarters? While analysts have upgraded their earnings forecasts and target prices (TPs) for the stock, there are concerns that the margin spread may peak in the first half of the year.
Share price-wise, despite breaking the RM3 level yesterday, it was still at a 50% discount compared to its IPO price of RM6.50.
In the latest issue of The Edge Malaysia weekly, we spoke to LCT’s new president and chief executive officer (CEO) Park Hyun Chul who shared updates on the group’s business activity and industry outlook, as well as measures taken to prevent disruptions to the water supply in the future.
All eyes are also on its planned RM18 billion Lotte Chemical Indonesia New Ethylene (LINE) project as it would propel LCT to become one of top three petrochemical companies in the region. Still, it remains to be seen whether the market environment will remain conducive for LCT as such major projects have a long gestation period.
In an accompanying story, we take a look at the polymer market in Asia, which has been well supported by strong demand and market shortages. However, polymer prices are expected to weaken in the second half of the year due to various factors.
Read more about it in The Edge Malaysia weekly’s May 3 edition.
