Its been going up almost everyday for a long time so its only natural it comes down a bit and stabilize. Today market is down coz of the US. A lot of counters taking a bigger drop today.
Logically nothing has changed fundamentally for Lotte Chem ( oil price remains low and end product prices high ). Powell came out and said that this crisis might take longer to recover than expected for the US
How much of an effect on Malaysian economy is subjective but our 'smart' fund managers will all take this a trading opportunity to sell down first and buy back later
The author is an analyst of Shinhan Investment Corp. He can be reached at jinmyung.lee93@shinhan.com. -- Ed.
1Q20 operating loss of KRW86bn (negative swing QoQ) far short of consensus
Lotte Chemical posted an operating loss of KRW86bn (negative swing QoQ) for 1Q20, far steeper than the consensus estimate of KRW41.2bn. All negatives were reflected in earnings, including inventory valuation losses (KRW61.5bn), regular maintenance-related losses (KRW13bn), and negative lagging effect (KRW173.6bn). By division, operating loss from olefins stood at KRW11.7bn (negative swing YoY), aromatics KRW40.7bn (RR QoQ), and Lotte Chemical Titan KRW69.5bn (RR QoQ). The advanced materials division recorded an operating profit of KRW41bn (+13% QoQ) and Lotte Chemical USA KRW13.9bn (-57% QoQ). Losses from olefins, aromatics and Lotte Chemical Titan were attributable to an explosion at Lotte Chemical’s Daesan NCC, input of high-cost naphtha, and weak demand. With the COVID-19 pandemic in full force from March, the advanced materials division was able to deliver relatively decent earnings. Lotte Chemical USA’s earnings were weighed down by one-off costs and MEG price declines.
2Q20 operating profit of KRW101bn (positive swing QoQ) on cost reduction
Lotte Chemical should be able to swing to an operating profit of KRW101bn (+KRW187bn QoQ) in 2Q thanks to the input of low-cost naphtha and removal of one-off costs. Naphtha prices are expected to decline 48% QoQ. PE and PP spreads are estimated to rise 10% and 14% QoQ, respectively. Operating profit from olefin operations will likely amount to KRW94.9bn (positive swing, +KRW106.6bn QoQ) and Lotte Chemical Titan KRW15.1bn (positive swing, +KRW84.6bn QoQ). Advanced materials operating profit is projected to reach KRW20.3bn (-51% QoQ) with major clients in the US and Europe hit by the COVID-19 pandemic. Lotte Chemical USA is forecast to post operating profit margin of 9.9% (-2.8%p QoQ) on rising ethane prices (C) and falling MEG prices (P).
Retain BUY and raise target price by 9% to KRW230,000
We raise our target price for Lotte Chemical to KRW230,000 based on the upward revision of our earnings forecasts. Earnings are expected to grow markedly in 2Q due to low oil prices. But a meaningful improvement in chemical market conditions is unlikely as the boost from low oil prices should be short-lived and global oversupply persists. Nevertheless, we find shares attractive at current price levels (PBR of 0.5x based on 2020F BPS), considering stronger profit fundamentals compared to past down-cycles and net cash holdings.
As long as crude don't come back to USD 50-60 level I am still buying for the mid term currently no other stocks present a better and safer option for mid term returns
i don't think company performance is based on level of oil prices but more on the demand supply dynamic of the economy toward the oil derivatives products.
It is good that LC Titan go up above RM1.90. At least it will wipe out all the speculators who had sold below RM1.80. The rise will be more stable after that.
One of the reasons Im still holding this is i cant find a better safe stock to switch to that hasnt gone up already. Guys if u have any please share.
If you been observing there is buying support for this everyday just that the buyer doesnt put it entire on the board for you to see. Everyday it goes up then fluctuates down.
Depending how you analyze, this is still a cheap stock to me with upside in next Q
that is exactly the same reason i bot this stock. i don't buy a stock for mere 30% gain. if i don't see 100% its no go. and i go in big position. i once saw this stock at IPO and looking at the prospectus, i tell myself its going to turn bad, never thought so badly hit and i forgot about it until recently. for the last 2 years i only go for gloves stocks and now this is my only focus. i hope i am right.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
titan3322
2,455 posts
Posted by titan3322 > 2020-05-13 09:23 | Report Abuse
another chance today don't miss it lah