KUALA LUMPUR (Aug 1): TA Securities has maintained its “sell” rating on Lotte Chemical Titan Holding Bhd (KL:LCTITAN) at RM1.07 with a slightly higher target price of RM1.06 (from RM1.03) and said the company registered a ninth consecutive quarterly loss in the second quarter of 2024 (2QFY2024). It noted that 2QFY2024 results came in within expectations.
In a note on Thursday, the research house said core net loss was RM402.8 million compared with house forecast of RM653.0 million loss and consensus forecast of RM759.0 million loss.
Outlook
On the outlook for the group, TA Securities said it expects Lotte Chemical Titan’s losses to narrow slightly in 3QFY2024 due to improvement in product spread for low density polyethylene (LDPE) and linear low density polyethylene (LLDPE).
“LDPE and LLDPE may see slight improvement in ASP (average selling price) in 3QFY2024 from seasonal increase in demand for flexible consumer packaging to cater for year-end holiday sales.
“Overall, LCTITAN is expected to continue facing losses in the coming few quarters as product spreads are unlikely to improve due to supply glut from massive capacity expansion (mainly in China) that outpaces the demand growth,” it said.
TA Securities said the construction of the Lotte Chemical Indonesia New Ethylene (LINE) project in Indonesia is expected to be completed in the first half of 2025.
“However, management may defer the commercial operation of the plants if product spreads remain unfavourable,” it said.