KUALA LUMPUR (Sept 21): Lotte Chemical Titan Holding Bhd's (LCT) earnings are likely to be impacted as the fire incident at one of its plants in Pasir Gudang yesterday is expected to trim the company's product volume by 3% on a worst case scenario, according to Maybank IB Research.

In the note review today, its analyst Mohshin Aziz said based on their channel checks, the plant that caught fire was TE3 plant and none of the other plants were affected.

"Based on our channel checks, such an incident could easily scale back the schedule by one to three months," he said.

TE3 is a new plant which involves the extension of its current facilities in Malaysia. Currently, the plant is undergoing commissioning process ahead of its planned start-up in October this year.

The plant has a nameplate capacity of 354KTA to lift LCT's total capacity to 3,368KTA by this year-end.

Mohshin said this fire will likely delay the start-up process as the management and authorities will carry out their investigation.

"Assuming the worst case scenario of a three-month delay, the plant will only commence operations in January 2018. This will cut product volumes by 3% against our 2017 base forecast," he said.

Despite this incident, the research house still maintains its buy call with a target price of RM7.85 for LCT.

"Incident during commissioning and start-up phase is unfortunately frequent, but petrochemical companies will always get things to work the way it should.

"We are confident that LCT will be able to resolve this issue within this year and our 2018 earnings forecast remains intact," he said.

Concurrently, Malacca Securities head of research Victor Wan opined that the incident is likely minor and it would not impact the share price drastically.

"I suspect it is not a major incident, just a small incident because the major operations are unaffected. There won't be much impact on the share price," he told theedgemarkets.com when contacted.

However, Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew said the fire that broke out at LCT is something unexpected and this caused the inability in LCT to perform.

"Most of the oil and gas (O&G) counters' share price is climbing but unlike LCT. I am not sure when the management is going to restore the situation.

"At the moment, I think the share price will be affected," he said.

An LCT spokesman yesterday said the extent of the damage from the fire cannot be confirmed at this juncture.

LCT's Pasir Gudang integrated facility houses nine of its 11 Malaysian chemical manufacturing plants.

The integrated facility is connected via dedicated underground pipelines to another integrated site in Tanjung Langsat 12km away, where the two other plants are located.

The management is expected to make an announcement later today detailing the incident and the impact to operations.

LCT is principally involved in manufacture and sales of petrochemical products and polyolefin resins.

Since it launched its initial public offering, the company had to trim its offer price to RM6.50 from RM8.50 and scale back its retail portion due to lukewarm response.

It has not been a smooth sailing for LCT since it was listed on July 11, 2017. Its share price took a nosedive an all-time low of RM4.28 when it announced a big fall in its second financial quarter's net profit. In less than a month of its listing, LCT lost as much as RM4.7 billion in market capitalisation.

At 11am, LCT fell 0.38% or two sen to RM5.27 with 6.82 million shares traded, for a market capitalisation of RM11.98 billion.