KUALA LUMPUR (Nov 4): Lotte Chemical Titan Holding Bhd (KL:LCTITAN) will likely stay in the red despite smaller losses in the recently-ended quarter, analysts said, flagging elevated cost and weak product prices.
An earlier-than-expected commissioning of the company’s naphtha cracker in Indonesia will mean higher depreciation charges, according to CGS International and Maybank Investment Bank. However, the plant is unlikely to turn profitable in the near term, the research houses cautioned.
“Given current market conditions and subdued olefin prices, achieving break-even may be an immediate challenge,” Maybank Investment Bank warned in its note, keeping its ‘sell’ call on the stock.
Lotte Chemical’s stock has declined another 16% in prices since the start of the year after losing more than half of its market value in 2024 as the company, which mainly produces olefin and polyolefin, grappled with a massive glut in the petrochemical market amid weakened demand.
There are now four ‘sell’ calls out of five research houses tracking the stock. BIMB Securities has the stock on ‘trading buy’ recommendation. The average target price is 40 sen, according to Bloomberg, implying potential decline of nearly 29% in the next 12 months.
The consensus is also projecting Lotte Chemical to remain in the red at least until the end of 2027.
Further, the company’s balance sheet is now under pressure from its Indonesian project’s US$180 million (RM756.81 million) debt instalment repayment that will begin in 2026, CGS International said.
With only RM947 million left as its net working capital balance at the end of September, the company may have to borrow to service instalments, failing which would put its survival at stake, the research house warned.