PublicInvest Research

LOTTE CHEMICAL TITAN - Prospects Still Attractive

PublicInvest
Publish date: Fri, 07 Jul 2017, 08:43 AM
PublicInvest
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Lotte Chemical Titan Holding Berhad (LCT), pursuant to the completion of its book building process has fixed its institutional price at RM6.50 per IPO share (previously guided at between RM7.60 and RM8.00 per IPO share). The final retail price for the IPO shares has also been fixed at RM6.50. The listing remains scheduled for 11th July 2017, and is expected to raise c.RM3.8bn (previously RM5.9bn) from new issuance of 580.0m shares (previously 740.5m shares). Revision in the share base has therefore necessitated an adjustment to our fair value, which now also assumes borrowings to make up the capex funding “shortfall”. We are thus revaluing LCT at RM7.72 per share based a revised FY18F EPS of 64.3sen, pegged to a lower 12.0x P/E multiple (previously 13.0x) as we remove the slight premium to the Group’s Southeast Asian peer average of 12.2x. We believe at the new final price of RM6.50, LCT’s growth is attractive, reflecting a 10.1x P/E to our FY18F estimates. This is further sweetened by the potentially higher dividend yield of 6.6% (previously 5.2%).

  • Change in IPO details. LCT has reduced both the final institutional and retail prices to RM6.50 per IPO share (previously guided at between RM7.60 and RM8.00), while also lowering the IPO offering size to 580.0m shares from previous 740.5m shares, all of which comes from the institutional portion (reduced to 524.2m shares from 684.7m shares previously).
  • LCT has also included a buy-back offer, available to both retail investors and non-cornerstone Bumiputera investors approved by MITI that had subscribed for the IPO shares on or by the closing date of 28 June 2017 prior to the change in final retail price of RM6.50 per IPO share. The buy-back offer will involve c.RM384.8m if all affected investors affected accept the offer. The new retail price of RM6.50 translates to a 10.1x P/E on FY18F EPS of 64.3sen, we are therefore encouraged that investors would see its valuations to be attractive and not take up the buy-back offer.
  • Change in funding allocation for its following projects. The utilisation of proceeds have changed, with a reduction on funding for the Integrated Petrochemical Facility in Indonesia to RM2.8bn (previously RM4.9bn), but the TE3 Project and PP3 Project remains unchanged. Estimated listing expenses are also lowered to RM115.7m from RM152.9m.
  • Upside ahead. We are revaluing LCT at RM7.72 per share based on our FY18F EPS of 64.3sen, pegged to a lower 12.0x P/E multiple (previously 13.0x) as we remove the slight premium to the Group’s Southeast Asian peer average of 12.2x. Our earnings estimates have been lowered between 1% to 3% for FY17F and FY18F respectively to account for the assumed borrowings and hence higher financing costs needed to fund the difference between the previous proceeds value of RM5.9bn and the current proceeds raised from the IPO.

Revised IPO Details

LCT is seeking a listing with an enlarged issued and paid-up share capital of 2,307,791,500 shares on Bursa Malaysia’s Main Market. Pursuant to the listing, the company’s market capitalization is RM15,000.6m based on its IPO price of RM6.50. The IPO allocation, post-IPO share capital of Lotte Chemical Titan and utilisation of IPO proceeds are shown in the following tables.

Source: PublicInvest Research - 7 Jul 2017

Discussions
Be the first to like this. Showing 50 of 65 comments

Apollo Ang

realisticly i'll be happy if same price as pchem now. in fact it should be

2017-07-07 12:00

Apollo Ang

blue chips,cornered stocks all didn't down,even sime is 9.50, only con stocks,lower profit stocks,lower liners,penny stocks are down

2017-07-07 12:41

TheContrarian

Lotte will drop after the buy back is exhausted.

2017-07-07 13:18

shortinvestor77

Wait and see. MIB is acting to stabling its price. Hard to drop. It is a cash rich company. If it borrows loan in in future, its gearing still is low.
After all, it has 50% dividend policy. Either it is up or down all the way is subject to its quarterly results 1 and 2 now.

2017-07-07 15:08

Apollo Ang

good stock no wanna buy, wanna buy the bad apples? rich become richer lah.....haha

2017-07-07 15:27

Apollo Ang

oil down good prospects for lotte,if no wanna buy,then buy which counters?

2017-07-07 15:29

ruslimz

as long oil below 60.00....Lotte is safe......

2017-07-07 15:32

Apollo Ang

safe? if oil below 40.00,lotte profit will exceed 2 bil and will up to more than 8.00

2017-07-07 15:38

smartly

3 good points & no way it will fail on opening :-

1. shares buy back offer.
2. mib stabilising manager.
3. low pe compare with pchem.

Everything is all set except one thing.

2017-07-07 16:00

Apollo Ang

good dividend yield u forgot to mention.....hehe

2017-07-07 16:05

smartly

@Apollo Ang, yes, one solid good point there.

& huat ah........

2017-07-07 16:14

Hiu Chee Keong

I will queue at 6.00 on first week.

2017-07-07 21:50

shortinvestor77

I will not sell to you but keeping it till RM 7.50.

2017-07-08 14:22

Apollo Ang

if 6.00 I will buy 100,000 units instead of buying a condo......sure win....haha

2017-07-08 21:58

Er Boon Chai

anyone welling to sell me his IPO share at RM7/share(private deal off market)? im looking for 10k shares.

2017-07-08 22:16

Apollo Ang

I think buying at 6.50 100,000 units wanna make 100k easier than buying a condo at 650k wanna make 100k at the moment

2017-07-08 23:23

Ehome009

Hi Er Boon Chai,
If u are serious, pls contact me 012-6661848 (call or whatsapp will do) to arrange for a private deal. Thanks.

2017-07-09 11:16

xuewenapeng

Will buy at 6.00

2017-07-09 13:54

CKCS

So many problems even before IPO. Do u expect the best out of it?

2017-07-10 10:11

CKCS

Read this subject matter....it tells u already it may be subject to stabilizing actions by Maybank meaning u can expect its share price on debut to FALL further loh. Why salesman still tried to sell u their weak advice to buy? LMAO

http://www.theedgemarkets.com/article/maybank-lotte-chemical-titan-may-be-subject-stabilising-action

2017-07-10 10:17

ruslimz

What problems maaa.....reduce price to 6.50 to suit global investors ...is it a peroblem......lowest valuation is 7.30......what is the problem.....the problem is you......

2017-07-10 10:26

smartly

sour ? next time try harder... :)

2017-07-10 10:31

sogeking

CKC makes new haters everyday at a level so efficient no one can top him. If only the talent can help him gain money instead. Poor soul.

2017-07-10 11:05

Apollo Ang

advcon today impressive debut, now almost 30% premium, tomoro LCTITAN opening RM 7.00-RM 7.50? TA,kenanga,and public invest chun chun on advcon.LCTITAN by public invest is now RM 7.72,hopefully tomoro open all HUAT ar

2017-07-10 11:38

sogeking

What is the next IPO ? Forget the name

2017-07-10 12:00

Apollo Ang

later lunch wif 2 remisiers and 1 analyst.later will be back to comment on what is their views on LCTITAN tomoro

2017-07-10 12:14

Apollo Ang

ok all of them said tomoro opening can see a 8-10% profit,and if keep for mid term can make a 20% profit.

2017-07-10 14:41

Apollo Ang

u can see now fund managers are unloading pchem so tomoro buy LCTITAN

2017-07-10 14:51

smartly

huat liao..... :)

2017-07-10 14:59

Apollo Ang

one of them wanna bet wif me 10k, if tomoro no RM 7.00 I win if got RM 7.00 and above he win,how?

2017-07-10 15:05

smartly

bet lah...hedging ma...:p

2017-07-10 15:06

Apollo Ang

touch already lost leh, whole day if done 7.00 lose 10k. not so worth to hedge lah. if he say 7.50 can bet lah

2017-07-10 15:59

CKCS

I told u 2 Big warnings signs from the beginning mah. It's "Undersubscribed" and "IPO price revision". If you cannot even understand both of these bad signs for an IPO then u better go to casino with better luck.

Look at today's morning fresh on TheEdge cover and article!
https://ibb.co/iEfOLF
https://ibb.co/muPNEa

Why are these salesman keep defending? No point loh. ChngJiauJiau can retire and stop dreaming to be FA sifu.

2017-07-11 07:36

Apollo Ang

should hv taken the hedging bet. anyway if like this gonna sell back for them,no loss except loss interest for 1 month.next time big ipo's tak laku bank islam of brunei and edra energy

2017-07-11 08:42

Apollo Ang

opening 6.50 is the worst......if 6.00 also good can buy and sell the 6.50 one back to them

2017-07-11 08:44

Apollo Ang

maybank ib now very malu....open like this after all retails sell back to them then only they push to tipu the retails?

2017-07-11 08:57

smartly

get ready to fill up form....

2017-07-11 08:59

Apollo Ang

dunno market can be dragged down by this?

2017-07-11 09:00

Apollo Ang

can fill up the forms already......hopefully fall to 6.00....haha

2017-07-11 09:19

catfish

No wonder Maybank said earlier has to stabilize the price today la

2017-07-11 15:54

Junichiro

Maybank buying now. Probably it will end above 6.40 to save some of their face.

2017-07-11 16:28

Apollo Ang

but is it useful for the retailers?

2017-07-11 16:30

Apollo Ang

maybank ib malu lah better let cimb ib to be main ipo book runner next mega ipo

2017-07-11 16:35

Junichiro

retailers are made to carry the baby.

2017-07-11 16:54

sogeking

lucky I jumped out of the boat at IPO price.

2017-07-11 17:02

CKCS

From undersubscribed to Maybank said to stabilizing price on listing day. Why the stupid salesman and others never learn to read the warning signs?

2017-07-12 08:05

chamlo

Apollo Ang bought before?

2019-04-29 21:14

apolloang

thankfully underwriters ambil balik at 6.50 or else I lost 1 house......hahaha

2019-04-29 21:50

joetay2

i think it is worth a punt below 3.50.

osted by apolloang > Apr 29, 2019 9:50 PM | Report Abuse

thankfully underwriters ambil balik at 6.50 or else I lost 1 house......hahaha

2019-04-30 21:41

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