Thanks choivo

Choivo Capital

Do you know the NETT impact currency on LCtitan? I assume weak USD is better for Lctitan as feedstock, naphtha is from import, USD denominated + production cost is locally (RM denominated) + sale is mainly cater for local demand, polyethylene for plastic maker in Msia and butadiene for glove maker in Malaysia. Lcitian did also some export of its end product to Indonesia and China, natural hedge currency. What do you think, is it right ?

bought back JCY at 73sen

2017
1. Margin spread of polyethylene-to-naphtha = USD 696/mt
2. Operating margin 14.5%
3. EPS 53.6sen

2018
1. Margin spread of polyethylene-to-naphtha = USD 614/mt
2. Operating margin 8.2%
3. EPS 34.6 sen

2019
1. Margin spread of polyethylene-to-naphtha = USD 483/mt
2. Operating margin 3.1%
3. EPS 19.4sen

2020 for 1H2020
1. Margin spread of polyethylene-to-naphtha = USD 493/mt
2. Operating margin - negative (inventory write down + turnaround plant + MCO causing local demand slump 50% etc)

2020 for 2H2020
1. Margin spread of polyethylene-to-naphtha = USD 600/mt
2. Operating margin + positive

Louisiana is home to many petrochemical plants and refineries, most of which are monitoring the storm before deciding whether or not to shut them down as a precaution.

Sasol, which has operations in Lake Charles, has activated its hurricane plan and all products loading was suspended at the close of business on Wednesday, according to a letter to customers.

Phillips 66 delayed complete restart of its Lake Charles, Louisiana, refinery because of the approaching storm.

CITGO is monitoring Hurricane Delta at its manufacturing complex in Lake Charles, Louisiana, according to a company.

Louisiana Pigment is planning on shutting its plant in Lake Charles today and releasing all non-essential personnel.

The following map shows the chemical plants in the area.

https://www.icis.com/explore/resources/news/2020/10/08/10561252/hurricane-delta-shifts-to-the-west-lake-charles-chem-plants-in-direct-path

sold back at 9.64 first

Next 2 week is only time left for LTAT to formally offer privatization, 80sen proposal may be good, but 90sen sen also possible in view of great improvement fundamentally change in its subsidiary, pahramaniaga and boustead plantation.

Another round of free share granted to director ahead of call for cash under upcoming right issue. Second round of Restricted Share Plan (RSP) Grant of the Long Term Incentive Plan.

1. Ang Lam Poah get 1,500,000 free share
2. Razali get 850,000 free share

bought Dpharma at 3.44

Deadline to firm up take over offer in next 2 week

https://www.thestar.com.my/business/business-news/2020/08/29/ltats-dilemma

add boustead at 65sen

1. Covid vaccine from China will soon ending its final clinical trial these month, and seek approval for wide administration. US vaccine may delay a month later after China. All in, vaccine will be available by end of these year and mass production next year onward

2. Vaccination need syringe

3. Every vaccination need single use disposable Syringe

4. Every person need 2 vaccination

5. Worldwide, at least few billion people need vaccination, especially, entire US, European population are mandatory for vaccination

6. Syringe is disposable and sterile. Manufactured from
polypropylene/polyethylene.

7. Lctitan 80% product is polypropylene/polyethylene

8. Lctitan feedstock, naphtha is at multiyear low level due to oversupply crude oil. Crude oil will unlikely rebound back to above USD 50 in near future due to travel restriction, limiting large portion of crude oil product, jet fuel, petrol usage in the world

Lcitian Profit margin is derive from crack spread between feedstock price, naphtha and product price, polypropylene, polyethylene, butadiene.

Any crack spread above production cost is pure profit to Lcititan. In the previous result, lotte only manage to reap about 5-7% net profit margin. If the crack spread widen to 15%, lotte net profit will increase 200%

Russia's Sputnik V vaccine not working......the Russia covid case is in V shape case high now

https://www.worldometers.info/coronavirus/country/russia/

LCtitan is undervalue stock, 75% market price is back by net cash, PE valuation is unjustified too low for upcoming V-shape earning recovery

https://www.youtube.com/watch?v=lkstTUGCYXE

https://www.kickstarter.com/projects/beyondfit-mask/the-beyond-fit-face-mask-custom-fit-3d-printed-and-reusable

Supermax will declare share dividend 1 for 45 these month, translate into final 21.5sen dividend

Supermax = top glove (mark to market ASP hike in manufacture) + prolexus (beyondfit mask) + own distribution brand

bought supermax at 9.55-9.56

Crack spread between naphtha and resin is key determinant. Another Hurrican on track to hit US petro hub again

https://edition.cnn.com/2020/10/06/weather/hurricane-delta-tuesday/index.html

Lotte Q result to be release these month is very important, it serve as real recovery in profit margin forward. The real test on impact ASP hike to profit margin, EPS > 10sen will serve as major catalyst for Lotte to breakout year high level RM 2.55

If wan to wait for share to go back to IPO price RM 6.50, you may need to wait for another 2-3 year till completion of its mega project line petrochemcial plant in Indonesia which is 2 x higher capacity. The line mega project is main reason Lotte raise fund of RM 3.5 billion from previous IPO.

sold back FGV at 1.04

sold back BP at 48sen

While many personal protective equipment (PPE) related stock have outperform several hundred % gain, the most important raw material (polypropylene and butadiene rubber) supplier LCtitan still far laggard behind.

1. Nitrite glove, vinyl glove,
2. face mask (polymer layer in 3 ply mask act as filtration against virus),
3. face shield,
4. eye goggle,
5. Syringe (will be on mass demand once vaccine available, every single person in the world for vaccinated, need twice injection, huge demand for disposal syringe)
6. Other healthcare plastic bag use for hazard, container etc

In upcoming Q result, lotte may declare interim dividend with dividend reinvestment share to rectify public spreading issue which have deadline until 23 Jan 2021.

Remark: Bursa Securities had vide its letter dated 7 July 2020 approved a further extension of time of 6 months until 23 January 2021 to comply with the public shareholding spread requirement pursuant to Paragraph 8.02(1) of the Main Market Listing Requirements.

As at the date hereof, the public shareholding spread of LCTH is 23.97%, which is below the minimum public shareholding spread requirement.

The Company wishes to inform that LCTH proposes to establish a Dividend Reinvestment Scheme (“DRS”) that provides shareholders with an option to elect to reinvest their dividends declared by LCTH (if any), in lieu of receiving cash, to facilitate the Company to address the shortfall in its public shareholding spread.

add all margin capital to LCtitan at 2.16-2.17

bought back FGV at 1.03

sold back jcy at 74.5sen

sold back at 1.72-1.73

add last LCtitan at 2.26-2.27

sold back FP at 1.06

downside limited, CPO regain positive, still above RM 2800

bullish

higher high, bullish

bought back JHM at 1.67-1.68

bought D&O at 1.04

bought back all JCY at 72-72.5sen

bought back LCtitan at 2.15

bought back BP at 44.5sen

sold back topglove at 8.82-8.85

Trump and wife test positive for Covid-19 (updated

https://www.thestar.com.my/news/world/2020/10/02/trump-and-wife-test-positive-for-covid-19

Hopefully these wave of rebound trigger by trump indeed can surpass above RM 10

Trump quarantine, may diagnosed infected. Glove stock back on radar

add all margin at 8.61-8.62

bought topglove at 8.66-8.67

cut at 1.04 first

Most of the FGV CPO production are use for in house purpose, refine to produce cooking oil. FGV newly venture into downstream cooking oil, under in house brand, Saji, is now command nearly 40% of entire market share.

FGV operating cost breakeven level is at RM 2200, anything surplus above these threshold level is pure net profit.

Based on average CPO price for Q3 about RM 2750, the estimate EPS for upcoming Q result is 4sen