Prospects Still Attractive for Lotte Chemical Titan

Public Investment Bank Research said prospects are still attractive for soon-to-be-listed Lotte Chemical Titan Holding Berhad (LCT) and values the stock at RM7.72.

In a note today, the research house said pursuant to the completion of its book-building process, LCT has fixed its institutional price at RM6.50 per IPO share (previously guided at between RM7.60 and RM8.00 per IPO share).

It said 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 circa RM3.8 billion (previously RM5.9 billion) from new issuance of 580.0 million shares (previously 740.5 million 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%),” it said.