Maybank IB downgrades call on Lotte Chemical Titan to ‘Sell’

KUALA LUMPUR (Jan 31): Maybank IB Research has downgraded its call on Lotte Chemical Titan Holdings Bhd (LCT) to "Sell" from "Hold" with a reduced target price (TP) of RM1.70 from its previous TP of RM2.85, following the company’s weaker financial year 2019 (FY2019) results.

LCT’s net profit eased to RM439.73 million in FY2019 from RM783.33 million a year earlier, and its revenue fell to RM8.48 billion from RM9.24 billion previously.

The company, which engages in the ownership and operation of polypropylene, polyethylene and aromatic plants, as well as ethylene crackers, also saw its earnings per share decline to 19.35 sen from 34.46 sen previously.

In a research note today, Maybank IB Research said LCT’s results were within the research house’s expectations.

“We cut our FY2020-2021 earnings per share (EPS) estimates by 33-37 per cent and we now project LCT’s FY2020 EPS to drop 38 per cent on higher maintenance days, presently low spread and impending stiffer local competition,” it said.

The research house also projected LCT’s project in Indonesia would exhaust the group’s cash pile in FY2021-FY2022.

At 11.06am, LCT declined 15 sen to RM2.08, with 2.21 million shares transacted.

Read also:
CGS-CIMB Research lowers target for Lotte Chemical Titan to RM1.62