Posted by Choivo Capital > 2020-09-25 11:57 | Report Abuse

For me, the target price is dynamic.

When my full article releases, and PP, PE and Butadiene prices shoot through the roof, it should increase to somewhere around RM2 to RM2.5 by 31 October 2020 as people anticipate the strong projected profits.

I’m being conservative on this one, as there are quite a few fund managers who have been traumatized by this company and want to get out.

This amount may be higher, if the telegram groups start promoting.

Personally, I’m projecting around RM600m or more for Q3, which is all time high quarterly profit, let’s say I’m wrong on this one, and its only RM350m.

Well, currently the market is pricing this company on a price to book basis, with the company not being worth much more than its cash, as most people still think this is some random petrochemical company that will suffer during this COVID, not one that will make record profits.

As the market may still think the profit may not be sustainable, it may only increase to RM3-RM3.5 post Q3 results, as people want more proof.

Now, im fairly certain Q4 will also be at least RM500m-RM600m in profits.

When this happens, suddenly, this company’s survival will no longer be in doubt, instead people will be thinking about all the expansion plans this company has.

They will think about the US associate contributing RM150m a quarter.

They will think about the Indonesia PP and PE plant which will grow revenue to RM25bil etc.

And then, suddenly, they want to price in the growth and maybe push it up higher to 10PE.

This is where it will go up to RM6.5 or more.

The most lucrative investment is one where people go from thinking it is dying (and thus valuing it on Price to Book Basis) and thinking it will now be making supernormal profits with strong potential for growth, and thus valuing it on a Price to Earnings Basis.

And I think LCTITAN is one of these stocks with a lot of catalyst upcoming.

Ofc, alot of things need to go right for it to reach RM6.5, but i think the odds are decent.

Posted by soros228 > 2020-09-25 12:01 | Report Abuse

chivo, so much profit ah? talking about 300 to 500 million, seems to be too opitimistic

Posted by Choivo Capital > 2020-09-25 12:02 | Report Abuse

wait for my full article this evening. Then you tell me if im too optimistic.


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Posted by soros228 > Sep 25, 2020 12:01 PM | Report Abuse

chivo, so much profit ah? talking about 300 to 500 million, seems to be too opitimistic

Posted by soros228 > 2020-09-25 12:04 | Report Abuse

looked like hidden gem, but the stock price is bearish

Posted by Choivo Capital > 2020-09-25 13:02 | Report Abuse

Yeah, alot of fund managers trauma in here, but come 31 Oct 2020 when results come out, it should seem much more optimistic.

Posted by Fabien "The Efficient Capital Allocater" > 2020-09-25 13:32 | Report Abuse

I believe the market is right to be cautious. Since its listing, for whatever reasons, LCT has disappointed time and again.

On valuation, i do note its parent in Korea is also valued on P/BV basis.

Anyway, I do think LCT will benefit in 3Q20 due to the strength in the PE/PP-Naphtha spreads. Likely, the petrochemical prices may remain strong until year end, helped by the hurricane disruptions. But i'm wary of the incoming new supply, especially the anticipated big increases in China PE productions & Pengerang coming on stream.

Good thing is the demand has seen its trough. One big plus factor is the Chinese economy is recovering strongly.

Buying below net cash is a no brainer though.

Posted by Choivo Capital > 2020-09-25 13:37 | Report Abuse

Fabien,

LCTITAN profits is very much tied to naphtha cost.

They IPO'ed in 2017, using 2016 results, which had some of the lowest Naptha costs in recent history due to the oil price crash. Giving them their all time high profit numbers.

After that Naptha prices went back up, and PP PE prices got squeezed from trade war.

Now Naptha prices all time low, and is lower than 2016. PP PE prices are higher due to squeeze in US, from shut down of shale oil (which contributes about 20% of all natural gas in the US and key feedstock for their plastic plants there), and now the hurricane.

I think Q3 and Q4 will be record levels of earnings. Esp with the US ethylene plant contributions.

Posted by vvcb > 2020-09-25 13:39 | Report Abuse

Thanks CC for sharing your informative analysis.

Posted by Sslee > 2020-09-25 13:53 | Report Abuse

A 50% dividend payout policy is good enough reason for me to employ my cash.

Posted by Sslee > 2020-09-25 14:11 | Report Abuse

2020 AGM PRESENTATION BY PRESIDENT & CEO DR. LEE DONG WOO 29th JUNE 2020
https://www.lottechem.my/upload/webBoard/LB15/LB15_a_20208515276.pdf

Posted by Choivo Capital > 2020-09-25 14:20 | Report Abuse

Because stock price bearish, that's why the gem is hidden haha.

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Posted by soros228 > Sep 25, 2020 12:04 PM | Report Abuse

looked like hidden gem, but the stock price is bearish

Posted by soros228 > 2020-09-25 14:36 | Report Abuse

Therefore I’m not so optimistic as the share price already shown.

Posted by Tkeng > 2020-09-25 14:49 | Report Abuse

Great writeup and astute observation Choivo Capital. I am also optimistic that LCTitan will show improvement in Q3.

Posted by humongainz > 2020-09-25 15:16 | Report Abuse

How many % of your portfolio is this?

Posted by humongainz > 2020-09-25 15:17 | Report Abuse

This is to Choi

Posted by Choivo Capital > 2020-09-25 15:26 | Report Abuse

Sailang in this for bursa, no margin lah.

Posted by humongainz > 2020-09-25 15:32 | Report Abuse

Ahem, you got balls.

Posted by ykloh > 2020-09-25 15:35 | Report Abuse

Its likely that a generous dividend will be paid to make sure that the DRS will be successful.

Posted by sonny7088 > 2020-09-25 15:43 | Report Abuse

Hi Sifu CHOIVO I Yong, can I have your email address?. THANKS

Posted by LiimInvest > 2020-09-25 15:57 | Report Abuse

Accumulating more

Posted by BornToSpeculate > 2020-09-25 15:58 | Report Abuse

I thought philip was so bullish on PCHEM previously bashing us on LCT saying it was useless company. Look like the tables have turned.

Posted by soros228 > 2020-09-25 16:02 | Report Abuse

Oh no
I miss the boat
Still can enter ?

Posted by BornToSpeculate > 2020-09-25 16:03 | Report Abuse

ive been trying to collect no volume from 1.78 onwards. very little vol until today

Posted by LiimInvest > 2020-09-25 16:08 | Report Abuse

1.94 now

Posted by Nicholas Loh > 2020-09-25 16:14 | Report Abuse

https://klse.i3investor.com/blogs/jomnterry/2020-09-25-story-h1513550839-LCTITAN_ALL_TIME_HIGH_SALES_VOLUME_AT_ELEVATED_ASPS_AND.jsp

Posted by Choivo Capital > 2020-09-25 16:21 | Report Abuse

Well good luck guys. Tmr i will be posting my full research.

Posted by investortrader88 > 2020-09-25 16:28 | Report Abuse

huat ahhhhh !

Posted by soros228 > 2020-09-25 16:28 | Report Abuse

Hope can sustain

Posted by Tkeng > 2020-09-25 16:44 | Report Abuse

@Choivo Capital... Very timely call. Uptrend is imminent.

Posted by soros228 > 2020-09-25 16:48 | Report Abuse

C capital very timely. Need to subscribe your research

Posted by aliyusof > 2020-09-25 17:01 | Report Abuse

I have been buying it as long as it is below RM2. For mid or long term investment. FD less than 2%. Keep some FD for emergency use, use only affordable and dispensable spare cash for this (amount that will make lose sleep when its price is down).

Posted by aliyusof > 2020-09-25 17:02 | Report Abuse

make me not lose sleep

Posted by soros228 > 2020-09-25 17:04 | Report Abuse

Any benefit with the massive sales of nitrite glove ???

Posted by Esperian > 2020-09-25 17:17 | Report Abuse

Expecting 50% gain before nx QR

Posted by LiimInvest > 2020-09-25 17:21 | Report Abuse

CONCLUSION

Global polyolefin market grows in tandem with population growth.

The petrochemical industry is cyclical. Due to natural disaster, PP and PE in the US are now under-supplied.

LCTITAN manufactures PE and PP. It is exposed to Asia Pacific, the fastest-growing polyolefin market. It may also benefit from America that includes North America, the largest polyolefin market.

Near all-time low raw material cost, all-time high sales volume, potentially all-time high ASP may lead to all-time high earnings in Q3. However, it is hard to determine accuralely how long this situation will last.

Business risks of LCTITAN: If the issue of undersupply softens sooner than expected, LCTITAN's PE & PE's selling volume ASPs may normalise sooner than expected, too. The cost of raw material price, naphtha, may increase.

LCTITAN has a cash balance of RM3.9 billion and a market cap of RM4.2 billion. Investors are only paying a ‘nett RM0.3 billion’ to ‘acquire a RM4.2 billion LCTITAN’.

Despite potential all-time high earnings, net cash, zero gearing, healthy current ratio of 7.4x and strong cash balance of RM4.2 billion, at a share price of RM1.84, the market is valuing LCTITAN at only 34% of its NTA.

Posted by aliyusof > 2020-09-25 18:40 | Report Abuse

Choivo capital and Liminvest.good information. Thank

Posted by LiimInvest > 2020-09-25 21:14 | Report Abuse

aliyusof@bro

Posted by Aimhigh > 2020-09-25 21:58 | Report Abuse

Sounds great

Posted by cbkia4896 > 2020-09-25 22:59 | Report Abuse

TP rm5?

Posted by Choivo Capital > 2020-09-26 08:41 | Report Abuse

https://klse.i3investor.com/blogs/PilosopoCapital/2020-09-26-story-h1514324256-_CHOIVO_CAPITAL_LCTITAN_5284_Five_Magic_Words_Rising_ASP_s_Falling_Cost.jsp


This is the full piece.

Cheers

Posted by greenberg > 2020-09-26 10:00 | Report Abuse

Next week going rise 40 cent

Posted by soros228 > 2020-09-26 10:01 | Report Abuse

So optimistic ah???

Posted by LaoTzeAhSir > 2020-09-26 10:09 | Report Abuse

rm6.5

Posted by YouNeedTrust > 2020-09-26 10:24 | Report Abuse

Thanks Choivo Capital for great sharing. Hope this time LCT will not disappoint us again. Cheers.

Posted by wallstreetrookie > 2020-09-26 10:38 | Report Abuse

choivo call buy then buy

Posted by wallstreetrookie > 2020-09-26 10:40 | Report Abuse

any other stock tips. I followed you in timecom lol

Posted by wallstreetrookie > 2020-09-26 10:41 | Report Abuse

now getting filthy rich from hooting Timecom years ago lmao

Posted by James Ng > 2020-09-26 11:24 | Report Abuse

https://klse.i3investor.com/blogs/general/2020-09-26-story-h1514326149.jsp
[转贴] [LOTTE CHEMICAL TITAN HOLDINGS BHD：平均产品售价降低] - James的股票投资James Share Investing

Posted by soros228 > 2020-09-26 14:32 | Report Abuse

Suddenly all talk about LCTITAN

Posted by Choivo Capital > 2020-09-26 14:35 | Report Abuse

Wallstreetrookie,

Glad to hear that,timecom saved me also. I could sell it during crisis and high price and buy everything else. I have since bought back.

I hope you got some opensys and rcecap as well.