PublicInvest Research
LOTTE CHEMICAL TITAN - Prospects Still Attractive
PublicInvest
Publish date: Fri, 07 Jul 2017, 08:43 AM
PublicInvest
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.
All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp
PUBLIC INVESTMENT BANK BERHAD (20027-W)
9th Floor, Bangunan Public Bank
6, Jalan Sultan Sulaiman, 50000 Kuala Lumpur
T 603 2031 3011 | F 603 2272 3704 | Dealing Line 603 2260 6718
All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp
PUBLIC INVESTMENT BANK BERHAD (20027-W)
9th Floor, Bangunan Public Bank
6, Jalan Sultan Sulaiman, 50000 Kuala Lumpur
T 603 2031 3011 | F 603 2272 3704 | Dealing Line 603 2260 6718
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
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Discussions
Be the first to like this. Showing 50 of 65 comments
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
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
good stock no wanna buy, wanna buy the bad apples? rich become richer lah.....haha
2017-07-07 15:27
oil down good prospects for lotte,if no wanna buy,then buy which counters?
2017-07-07 15:29
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
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
if 6.00 I will buy 100,000 units instead of buying a condo......sure win....haha
2017-07-08 21:58
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
Maybank buying now. Probably it will end above 6.40 to save some of their face.
2017-07-11 16:28
maybank ib malu lah better let cimb ib to be main ipo book runner next mega ipo
2017-07-11 16:35
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
thankfully underwriters ambil balik at 6.50 or else I lost 1 house......hahaha
2019-04-29 21:50
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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realisticly i'll be happy if same price as pchem now. in fact it should be
2017-07-07 12:00