The worst may be over for Lotte Chemical

Analysts upbeat on its bottom line for the next two years

LOTTE Chemical Titan Holding Bhd appears to be in a tough spot.

After posting its worst quarterly earnings since its initial public offering (IPO) about 1½ years ago, the petrochemical giant saw several brokerages cut their target prices for its shares and earnings forecasts for financial years ending Dec 31, 2019, and 2020.

Lotte Chemical’s profitability has been under pressure since the second half of 2018 as a result of thinning margins for all its products because of high input or feedstock prices, coupled with the fall in its product prices.

This squeeze is most apparent during the last three months of 2018, when the company posted a 97% year-on-year (y-o-y) decline in its net profit to RM10.1mil, or 0.45 sen per share.

The weak quarter brings its full-year net profit down by 26% y-o-y to RM786.2mil, or 34.6 sen per share, which was 11% below market estimates.

But going by the forecasts of most analysts, the worst may be over for the group that has seen two consecutive years of earnings decline.

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