Timetable for IPO

Above is the time table for its IPO and tentative listing date will be on 11 Jul 2017. Let's look the the stat sheet of Titan as below

Crude oil price has a very high influence on its profit margin, when crude oil price was over RM100/barrel in 2014, its earning was greatly affected, when crude oil price was coming down in 2015 and 2016, net profit and profit margin grew.

by looking at the 2016 financial year report, it has top notch financial with little debt. Its profit margin was considered reasonable compare to its competitors

At the moment Petronas Chemical and PT Chanda Asri trades at P/E 16.02 and 16.52 respectively vs Titan 15.00 according to the IPO price. With good business structure, plan, finance and utilization of IPO proceed (RM 4B to develop chemical plan in Indonesia), I believe P/E of 17-18 should be reasonable for Titan by end of 2017, thus, gives us a share price of RM8.70 to RM9.20, by assuming crude oil price does not fratuate much and maintain within RM50/barrel in 2017.

Titan has 50% dividend policy which expect to deliver 25 to 30 cents DPS per year or 3-4% DY per year. Investor should aim for capital growth over a period of 1/2/3 years instead of dividend gain due to its DY per year is around FD rate.

I was impressed by the purpose of this IPO proceeds, the IPO funds raised would be fully utilize in business expansion which in the end turns into a new stream of revenue from the Indonesian side, rather than settling debts. With high institution allocation, I don't see any downside in first day of trade.

The only concern is: olefins is not specifically "branded", which means Lotte Chemical products does not differ from any other competitors in the market. RAPID project by Petronas at Penggerang, Johor may have a great impact on Titan upon project completion by 2021. 

Conclusion: Lotte Chemical Titan Holding Bhd is a decent stock to hold for capital gain over a period of 2-3 years. After that investor needs to reevaluate its business potential by looking at the ROI in Indonesia and the impact of RAPID upon project completion before to decide to hold for longer term.

*Disclaimer: the information above is only for sharing purpose. It doesn't contain buy or sell call. Buy at your own risk.