Lotte Chemical Titan debuts on main market of Bursa Malaysia

Lotte Chemical Titan debuts on main market of Bursa Malaysia

Shares of Malaysia's biggest listing in five years opened flat at its initial public offering price of at 6.5 ringgit per share, but has now drifted lower to 6.38 ringgit per share.   

KUALA LUMPUR: Lotte Chemical Titan (LCT) made its debut on the Main Market of Bursa Malaysia on Tuesday (Jul 11) at RM6.50 (US$1.53), unchanged from its initial public offering (IPO) price.

The integrated petrochemical producer, which expected to raise close to RM3.8 billion from the IPO involving up to 580 million shares - the largest listing since 2012 - saw 21 million shares traded at the opening.

LCT recently fixed its institutional price at RM6.50 per IPO share (previously guided at between RM7.60 and RM8 per IPO share) after completing its book-building process.  

Based on the IPO price of RM6.50 per share, the company’s market capitalisation hits about RM15 billion.

LCT President/Chief Executive Officer Lee Dong Woo said at RM6.50, the price is attractive. 

"Although the IPO did not raise as much as originally planned,  the amount, close to RM4 billion is still  significant.

"LCT is a net cash company with a strong balance sheet and there is no issue on utilisation even though the amount raised is less than targeted earlier," he added. 

The company earlier aimed to raised RM5.9 billion from an issuance of 740.5 million new shares at an original IPO price of RM8.

Lee said the company today is the largest integrated producer of olefins and polyolefins, as well as the sole producer of butadiene in Malaysia, and the largest polyethylene producer in Indonesia. 

Although LCT may face competition from the Petronas Refinery and Petrochemical Integrated Development (RAPID) project, he noted that the industry is in a strong demand growth area, and the market should be able to fully absorb the supplied materials.

Lee said the proceeds from the re-entry to Bursa Malaysia will be used to drive an expansion plan in the ASEAN region to further improve operation and capacity.

It would involve the development of a RM15.5 billion integrated petrochemical facility in Indonesia to increase the company’s ethylene production by up to 1,000 KTA (kilo tonnes per annum) capacity, and construction of a new polypropylene plant in Johor to increase production by 200 KTA.

LCT Senior Vice President Corporate Planning, Philip Koh said while at the moment,  it is still focusing on the current business and on ASEAN, the company has also been involved in a joint venture shale gas project in the United States, meant for the North America,  China and European markets. 

"Over 74 per cent of the LCT's IPO proceeds will be used for the development of an integrated petrochemical facility in Indonesia. 

"The company has a strong financial position. As at the first quarter, it had RM425 million cash. With the IPO proceeds and future generated funds which could be in the form of borrowings if necessary, we are confident of being able to fund all projects

LCT recently cut the IPO’s size by a fifth with a lower offer price of RM6.50 against RM8 initially.

Maybank Investment Bank Bhd officials met at Bursa Malaysia said LCT’s shares may be subject to stabilising action and the bank may initiate a buy back action on the IPO to stabilise the price.

LCT’s listing on Tuesday marked Titan’s return to the Malaysian equity market after it was delisted in 2011 following the takeover by Lotte Group.

According to its prospectus, LCT aims to pay dividends of an amount equal to about 50 per cent of its consolidated net profits every fiscal year.

Source: Bernama/ec