Timetable for IPO
| LOTTE CHEMICAL TITAN HOLDING BERHAD |
| Opening of application | 16 Jun 2017 |
| Closing of application | 28 Jun 2017 |
| Balloting of application | 03 Jul 2017 |
| Allotment of IPO shares to successful applicants | 07 Jul 2017 |
| Tentative listing date | 11 Jul 2017 |
Above is the time table for its IPO and tentative listing date will be on 11 Jul 2017. Let's look the the state sheet of Titan as below
Crude oil price has a very high influence on its profit margin, when crude oil price was over RM100/barrel in 2014, its earning greatly affected, when crude oil price was coming down in 2015 and 2015, net profit and profit margin grew.
by looking at the 2016 financial year report, it has top notch financial with little debt. Its profit margin was considered reasonable compare to its competitors
At the moment Petronas Chemical and PT Chanda Asri trades at P/E 16.02 and 16.52 respectively vs Titan 15.00 according to the IPO price. With good business structure, plan, finance and utilization of IPO proceed (RM 4B to develop chemical plan in Indonesia), I believe P/E of 17-18 should be reasonable for Titan by end of 2017, thus, gives us a share price of RM8.70 to RM9.20, by assuming crude oil price does not fratuate much and maintain within RM50/barrel in 2017.
I was impressed by the purpose of this IPO proceeds, the IPO funds raised would be fully utilize in business expansion which in the end turns into a new stream of revenue from the Indonesian side, rather than settling debts. With high institution allocation, I don't see any downside in first day of trade.
The only concern is: olefins is not specifically "branded", which means Lotte Chemical products does not differ from any other competitors in the market. Price war definately will dilute its profit margin.
*Disclaimer: the information above is only for sharing purpose. It doesn't contain buy or sell call. Buy at your own risk.
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