KUALA LUMPUR (Nov 1): Lotte Chemical Titan Holdings Bhd's share price fell in early trades today, hitting an all-time low of RM2.43, after the group reported weak quarterly earnings yesterday.

The stock recovered as trading progressed. At 3.46pm, the counter stood at RM2.46, down two sen or 0.81%, with a market capitalisation of RM5.68 billion.

Year to date, the stock has fallen by about 44%.

Yesterday, Lotte Chemical said its net profit fell 58% to RM91.3 million in the third quarter ended Sept 30, 2019, from RM216.89 million in the same period a year ago, as it continued to face a margin squeeze due to sliding average product selling prices of polymer products.

The lower selling prices, it said, are mainly due to the diversion of cheaper polyolefin supply from the US into Southeast Asia that pressured regional product prices — no thanks to the US-China trade war — as well as a softening of global economic growth.

Quarterly revenue decreased 10% year-on-year to RM2.17 billion from RM2.42 billion.

According to Bloomberg, eight analysts cover Lotte Chemical. Two of them have buy calls, two have hold calls and four have sell calls.

BIMB Securities Research said in a note today that Lotte Chemical's nine-month net profit was below the research house's and consensus forecast by 39% and 47% respectively.

It has downgraded the recommendation on Lotte Chemical to Sell from Hold with a lower target price of RM2.

The research house cut the earnings forecast by 36% to 63% for the financial years 2019 to 2021. The earnings downgrade also reflects the higher depreciation and effective tax rate.

Going forward, the research house said it is cautious on the narrowing polymer spread (the segment accounts for 80% of revenue), particularly in view of the new supply from Petronas' Refinery and Petrochemical Integrated Development (RAPID).