KUALA LUMPUR (Jan 31): CGS-CIMB Research has maintained its “Reduce” rating on Lotte Chemical Titan Holding Bhd (LCT) at RM2.23 with a lower target price of RM1.62 (from RM1.78) and said LCT’s FY19 core net profit of RM250 million was above house RM205 million forecast, due to higher-than-expected sales volume, but was 10% below consensus.
In a note today, the research house said the outlook for the forecast period is bleak on account of growing global overcapacity, and China’s move to cut consumption of single-use plastics.
“Reiterate Reduce, raise loss estimates, and lower target price to RM1.62, still based on EV/EBITDA of 4x (half of sector average due to low margins),” it said.
At 9.33am, LCT dipped 0.89% or 2 sen to RM2.21, valuing it at RM5.10 billion.