Lotte Chemical, a producer of olefin and polyolefin and a unit of South Korean multinational ethylene producer Lotte Chemical Corp, is the biggest public offering in the country since 2012.
KUALA LUMPUR: PublicInvest Research (PIVB) believes growth for Lotte Chemical Titan (LCT) at the new final price of RM6.50 is attractive, reflecting a 10.1 times price-to-earnings (P/E) to its FY18F estimates.
LCT fixed its institutional price at RM6.50 per IPO share (previously guided at between RM7.60 and RM8 per IPO share) after completing its bookbuilding process.
The listing remains scheduled for July 11 and is expected to raise RM3.8bil (previously RM5.9bil) from issuance of 580 million new shares (previously 740.5 million new shares).
“Revision in the share base has therefore necessitated an adjustment to our fair value, which now also assumes borrowings to make up the capex funding ‘shortfall’.
“We are thus revaluing LCT at RM7.72 per share based a revised FY18F EPS of 64.3 sen, pegged to a lower 12.0 times P/E multiple (previously 13.0 times) as we remove the slight premium to the Group’s Southeast Asian peer average of 12.2 times.
PIVB Research said the growth of LCT is further sweetened by the potentially higher dividend yield of 6.6% (previously 5.2%).
To recap, LCT revised its IPO which also included a buy-back offer, available to both retail investors and non-cornerstone approved Bumiputera investors which subscribed for the IPO shares on or by the closing date of June 28, prior to the change in final retail price of RM6.50 per IPO share.
The buy-back offer will involve RM384.8mil if all affected investors affected accept the offer.
“The new retail price of RM6.50 translates to a 10.1 times P/E on FY18F EPS of 64.3 sen, we are therefore encouraged that investors would see its valuations to be attractive and not take up the buy-back offer,” it said.
The utilisation of proceeds has changed, with a reduction on funding for the Integrated Petrochemical Facility in Indonesia to RM2.8bil (previously RM4.9bil), but the TE3 Project and PP3 Project remains unchanged. Estimated listing expenses are also lowered to RM115.7mil from RM152.9mil.
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