Target Invest KLSE

Saturday, August 31, 2024

I INVESTED IN LCTITAN FOR 5 REASONS, AND THE LAST REASON JUST GAVE MY INVESTMENT MORE SPICE AND EXCITEMENT

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If you do follow my on TargetInvest Telegram, or if you do read my blog posting, you would know by now that I take interest in LCTITAN due to several reason

1. Sharp discount to NTA

Current share price is an attractive 80% discount to the NTA of almost RM 5. With the IPO at RM 6.50, the current share price is very attractive compared to IPO investor a few years ago.

2. Demand uptrend on US interest rate reduction

Petroleum Chemical, Specialty Chemical looking at a rebound as manufacturing look forward to picking up steam as US start to reduce interest rate gradually to stem out a potential recession.

3. Oversupply issue to see an end

China destocking is almost complete going into 3Q 2024. New demand will pick up on 4Q 2024

4. Chemical plant shut down

China closing down smaller chemical plants which have less than 300k ton annual production output. This is in line with China tightening environment regulation. Europe also have plant shut down due to the price pressure.

5. Potential take-over target for Petronas

Lctitan has initiated intention of selling its 75% stake in the Malaysia outfit. Malaysia only potential buyer is Petronas Chemical, which at the same time looking to expand more into specialty chemical as it seeks to replace the revenue lost in Sarawak upstream oil and gas business.

While all the factors are good and interesting, the oil and gas development in Malaysia made it even more interesting as Sarawak take back control on all upstream oil and gas business. (Now start with gas portfolio). Petronas play a very important role in the national coffer, especially when it comes to subsidies. However, as PETROS start to take back upstream business in Sarawak, Petronas will stand to take a potential hit of around RM 100 billion in annual revenue.

Ever since the discussion and start of MA63 in 2018, I noticed that Petronas Chemical had started out acquiring chemical company in a very aggressive manner.

In 2019, Petronas Chemical acquire Da Vinci Group B.V.

PCG Completes Acquisition of Da Vinci Group B.V. | PETRONAS Chemicals Group Berhad (PCG)

Then head on to BASF PETRONAS

PetChem to acquire Gebeng derivatives plant from BASF JV (theedgemalaysia.com)

It also acquired Perstorp in Sweden for RM 10.5 billion

PCG Makes Landmark Acquisition of Perstorp, a Global Leader in Sustainable Specialty Chemicals, for RM10.5 Billion | PETRONAS Chemicals Group Berhad (PCG)

The series of aggressive acquisition had probably sent an underlying message that Petronas is looking to expand the oil and gas downstream business (Chemical division) in order to replace the revenue lost from the asset handover to Sarawak, which is probably looking to complete in Jan 2025.

"While there has not been any formal announcement of a definitive agreement on the transition from Petronas to Petros, Sarawak’s Minister of Utility and Telecommunication Datuk Seri Julaihi Narawi reportedly said that the parties have agreed to sign a definitive agreement by July 1. However, there still had not been any announcement on the signing at the time of writing." taken from TheEdge

Cover Story: Petros’ landmark gas sale agreements a sign of more to come (theedgemalaysia.com)

As of now, there are no official announcement on the handover, except for seeing PETROS signing landmark agreement in gas supply in Sarawak, which could reflect an interesting development behind the wall. However, it will not be a surprise to see Petronas provide an official update on the matter in the later time (official news embargo for 1 to 3 months) as seen before in the contract award for Kasawari CCS project.

Moving forward, the Chemical industry outlook will look set to see an interesting year ahead. As an investor of LCTITAN, I do hope that my investment research will be fruitful.

Referencing material

Petrochemical companies may see a return to normal | McKinsey

Others

Target Invest KLSE: MALAYSIA HYDROGEN ECOSYSTEM - LCTITAN, MISC, M&G (targetinvest88.blogspot.com)

Target Invest KLSE: LCTITAN - A POTENTIAL MISSING PIECE OF JIGSAW PUZZLE FOR PETRONAS ? (targetinvest88.blogspot.com)

IMPORTANT NOTICE

Please be informed that I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.

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Wednesday, August 28, 2024

CENSOF GET HEADSTART ON EINVOICE FROM OTHER LISTED PEERS

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Malaysia had given an extension of 6 month for the 1st phase of e-invoice implementation to all the business that fall in the category of annual revenue turnover which is more than RM 100 million.

While the extension seems to be a dampener for the e-invoice share market hype, I believe that the fundamental of the e-invoice company will not change and such a drop in share price could be a good opportunity to invest in.

There are many companies involve in e-invoice, however the golden lining lies on the accreditation of the service provider by the government. As of current, there are still many companies pending on test and trial with the e-invoice system, however, there are a list of companies which are accredited for e-invoice.

CENSOF is worth a good mention as it is one the listed company in KLSE that had been accredited for the e-invoice system earlier than other of its listed peers (ADB, IFCAMSC, PANDA, YGL) which are still pending on test and trial.

To recap, Censof already have e-invoicing solution and service running in Singapore and some other SEA countries.

Censof partners e-invoicing solutions firm Storecove | The Star

According to the MDEC update on accredited e-invoicing firm, Censof and it's related subsidiary is accredited.

Technically looking, Censof is now trading at the mid term support line

I am invested in CENSOF for the exposure of e-invoice for the long run and I believe CENSOF can benefit from the MyDigital effort further in the future.

IMPORTANT NOTICE

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Monday, August 12, 2024

LCTITAN - A POTENTIAL MISSING PIECE OF JIGSAW PUZZLE FOR PETRONAS ?

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The recent happening in the oil and gas situation in Malaysia had definitely throw an ultimatum to Petronas in searching for asset to replace the potential revenue and profit losses from the handover of Sarawak oil and gas business.

Cover Story: Petros’ landmark gas sale agreements a sign of more to come (theedgemalaysia.com)

This is one of the political promises to honor MA63 agreement.

While it will be a good progress for Sarawak, but Petronas being one of the major revenue and income for Malaysia, it is important to seek for other asset to replace loss of revenue and profit.

LCTITAN main business activities are producing chemical product from refined oil and gas material. Lotte Chemical Titan Holding Berhad (LCT) is a Malaysia-based investment holding company, which manages LCT Group. The Group, comprising the Company and its subsidiary, is an integrated petrochemical producer with two principal product categories: Polyolefins, consisting of polyethylene (PE) and polypropylene (PP), and Olefins, including ethylene and propylene, together with other derivatives, such as butadiene, tertiary butyl alcohol (TBA), benzene and toluene. The Company's products are mainly distributed to plastic fabricators and trading houses in both domestic and export markets, such as China, South Korea, Indonesia and other Southeast Asian countries, as well as various European countries. Other business activities of the Group include investment holding and the manufacture of synthetic rubber. Lotte Chemical Titan Holding Berhad's subsidiaries include Lotte Chemical Titan (M) Sdn Bhd, Lotte Chemical Titan Trading Sdn Bhd and Lotte Chemical Titan Corporation Sdn Bhd.

The recent profit margin squeeze had placed a difficult position in LCTITAN to be profitable as factory utilization rate still hang around 60 to 65%. This had caused LCTITAN continuous losses for 9 quarters, forcing the owner to look into selling the whole Malaysia LCTITAN unit and focus on higher margin business - battery material

One of the reason LCTITAN cannot be profitable is due to LCTITAN do not have refinery business. Unlike Petronas Pengerang Integrated Complex, the upstream downstream refinery until end product can provide the company a strong top to bottom approach in operational profitability.

LCTITAN FOR SALE

News of LCTITAN looking to sell is circulating in the market for quite some moment. However, as the industry is very niche and specialize, there are not much buyer in the market. For the case of Malaysia, it will probably only be Petronas Chemical Group.

Petronas probably had saw the potential of oil and gas business handling back to Sarawak state control Petros, and had formulated a move to diverse out from upstream operation into downstream, with focus on specialty chemical.

Petronas Chemical had bought over BASF PETRONAS JV factory plant in Gebeng Kuantan in 2021.

The most recent will be PERSTORP HOLDING AB from Sweden in 2022.

PCG Makes Landmark Acquisition of Perstorp, a Global Leader in Sustainable Specialty Chemicals, for RM10.5 Billion | PETRONAS Chemicals Group Berhad (PCG)

However, the vacuum of RM 100 billion revenue loss is very big, and potentially can see Petronas going to seek more M&A to boost back the revenue and profit.

An opportunity to acquire LCTITAN is very much a big potential and a deal both parties are looking at, LCTITAN being eager to sell, and Petronas being eager to expand into Chemical.

As an investor, I need to inform my reader that I am invested into LCTITAN due to it's attractiveness in potential coming sale, current share price RM 1.02 being just 21% of the NTA RM 4.99. LCTITAN unit also will be able to produce toluene for future MCH transportation which will be profitable.

Reference

Target Invest KLSE: HOW MUCH HYDROGEN CAN 1 MOLECULE OF TOLUENE CARRY? HOW MUCH TOLUENE IS NEEDED FOR HYDROGEN STORAGE AND TRANSPORT BETWEEN MALAYSIA AND JAPAN KOREA? (targetinvest88.blogspot.com)

IMPORTANT NOTICE

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Wednesday, June 5, 2024

HOW MUCH HYDROGEN CAN 1 MOLECULE OF TOLUENE CARRY? HOW MUCH TOLUENE IS NEEDED FOR HYDROGEN STORAGE AND TRANSPORT BETWEEN MALAYSIA AND JAPAN KOREA?

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88

We are reaching to the 2nd half of 2024. Had you started out your equity market investment in 2024? An investment is where you had study deeply on a certain industry / company, and you are convinced of your study and research, and you can see the potential growth, and willing to put your capital to work, holding it for maybe 1 to 2 years in order to see your invested company come into fruition. We can be talking of multi baggers, 50 to 100% or more.

Here I am invested in CENSOF, and I am still invested in CENSOF without selling a single share. While CENSOF had went up steadily, I had discovered LCTITAN, and I am too invested in LCTITAN due to it's potential growth and involvement in the hydrogen storage logistic, by producing a chemical named Toluene, to mix with hydrogen to get MCH (methylcyclohexane)

Today, I am going to share more in depth of how much hydrogen a molecule of toluene can carry, and working on the potential production needed, along with potential revenue.

The whole reaction involves

3 hydrogen = 3 H2

1 toluene = C6 H5 CH3

and mixing it with a reagent and around 200 degree celcius heat, you get 1 molecule of MCH

1 MCH = CH3 C6 H11

So we will work on the molecule weight of each

1 MCH = 98.186 g/mol

1 Toluene = 92.148 g/mol

3H2 Hydrogen = 6.038 g

(1 H2 = 2.013 g/mol)

Working out on the percentage

1 MCH = 93.85% of TOLUENE + 6.15% of HYDROGEN

Which means, every 1 TON of MCH, it will contain 61.5KG of HYDROGEN that can be dehydrogenated out to use.

According to Petronas,

Kerteh will be exporting 50000 ton of blue hydrogen using MCH (Spot 1 and 2)

Sarawak will be exporting 90000 ton of green hydrogen using MCH (Spot 4)

The total will be 140,000 ton of hydrogen that will be transported via MCH

How much TOLUENE will be needed to transport 140,000 ton of hydrogen?

We will use the formula 140,000 ton / 0.0615 X 0.9385 = 2,136,422 ton of Toluene

Now 1 ton of Toluene is selling around USD 1100 to USD 1300.

The total potential revenue is 2,136,422 x USD 1200 (avg pricing) x RM 4.7 (exchange rate) = RM 12,049,420,080.

Now that is a whopping extra RM 12 billion of Toluene sales coming into LCTITAN pipeline in the future.

According to research, Toluene has a shelf life of 1 year.

If LCTITAN work on a 10% margin, that will be RM 1.2 billion of profit.

Looking at the chart, it looks like LCTITAN had a break out on downtrend on end of May closing, however, it went back down starting beginning of June.

I will possibly explain this situation in my next posting.

I want to informed that I am invested in LCTITAN due to it's prospect in hydrogen storage logistic. Hydrogen is a good prospect as energy storage due to zero carbon produce during the burning process, and many country are shifting towards hydrogen.

IMPORTANT NOTICE

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Thursday, May 23, 2024

MALAYSIA HYDROGEN ECOSYSTEM - LCTITAN, MISC, M&G

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I had been covering on Hydrogen and how LCTITAN can be involved in the hydrogen logistic ecosystem by producing Toluene as a hydrogen carrier to become MCH (Methylcyclohexane)

You can read more here

Target Invest KLSE: HOW LCTITAN CAN BE ROPING INTO THE GREEN HYDROGEN ECOSYSTEM WITH TOLUENE? (targetinvest88.blogspot.com)

I would like to share more on the whole ecosystem and it's stakeholder and company which can be potentially involved in other parts of the hydrogen logistic.

Currently, LCTITAN seems to be very undervalued with NTA ranging at RM 5.

With Blue Hydrogen slated to commence delivery in 2025, LCTITAN toluene production should be kicking in, and will be looking to utilize the factory more towards 90%.

Can LCTITAN finally break out from this down trend and come out like a shining star?

I am invested in LCTITAN and very interested in the green hydrogen ecosystem.

IMPORTANT NOTICE

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88

Monday, May 20, 2024

HOW LCTITAN CAN BE ROPING INTO THE GREEN HYDROGEN ECOSYSTEM WITH TOLUENE?

Blog https://targetinvest88.blogspot.com

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Today, I would like to share with you all my reader a potential stock with great exposure in the upcoming development of the green energy era.

As we are battling with global climate warming, develop nation all over the world is rushing to find another alternative to the current energy demand, which boils down to -> renewable energy. The renewable energy sector is very big and diverse, but a cleaner option would be wind, solar and hydro.

But some countries do not have the condition to generate enough sustainable renewable energy, hence will result into importing renewable energy in the form of HYDROGEN (H2).

Malaysia is blessed to be natural resources and ample of sunlight, and Japan and Korea had chosen Malaysia as one of their future renewable energy sources - to use solar and hydroelectric to generate electricity for electrolysis of water into oxygen and hydrogen

Sarawak aiming to be hydrogen hub - MIDA | Malaysian Investment Development Authority

Petronas partners Eneos for hydrogen-to-MCH project (themalaysianreserve.com)

Terengganu berpeluang jadi hub hidrogen Semenanjung Malaysia | MalaysiaNow

Hino joins hydrogen demo study; Advent participates in decarbonising maritime (h2bulletin.com)

What is MCH (Methylcyclohexane)? Why Japan and South Korea is using MCH as Hydrogen import?

Hydrogen can be transported in many forms. Gas form is not viable because it lacks density. Liquid hydrogen is very cost because it is very you need it to be freeze into -253 degree celsius, and stored at constant -162 degree celsius, which is very energy draining.

Hence the alternative will be storing hydrogen as mixture liquid, which is

1. Ammonia (NH3)

2. MCH (methylcyclohexane)

However, Ammonia is corrosive, and will not be suitable to be stored in the existing infrastructure of the oil storage tanks in Japan and Korea.

The best option is MCH, which is a product by mixing hydrogen and toluene.

MCH characteristic

- stable in room temperature

- can be stored in existing oil drum storage facilities

- can be shipped by existing marine oil tanker

- can hold more hydrogen than other liquid

- can be recycled to use

JGC wins FEED contract for green hydrogen project in Malaysia | Upstream (upstreamonline.com)

So how does LCTITAN come into the picture of HYDROGEN and MCH (Methylcyclohexane) ?

From a chemical producer running into green energy supply chain, LCTITAN is poised for a strong rerating as they will be the main player in the whole picture of hydrogen to MCH conversion.

LCTITAN is the main producer for a critical component in the creation of MCH -> toluene

Product Guide | LOTTE CHEMICAL TITAN

Hydrogenation of toluene:

CH3 C6 H5 (Toluene) + 3 H2 (Hydrogen) → CH3 C6 H11 Methylcyclohexane

I will be sharing more information on this area soon.
How much hydrogen is needed by Japan and South Korea?

How much toluene will need to be produce?

What is the timeline?

What is LCTITAN strategy in Malaysia and Indonesia?

Finally, and most interestingly, are you ready to get invested into green hydrogen supply chain by looking up at LCTITAN? I have to informed my reader that I am invested in LCTITAN because of this green hydrogen energy transfer between Malaysia and Japan / South Korea. I had also found of that Petronas Chemical do not produce Toluene, which make LCTITAN a possible sole producer for now.

Please do your own research and study on this area before investing.

IMPORTANT NOTICE

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88

Friday, May 17, 2024

IS CENSOF WORTH YOUR HOLDING FOR THE NEXT 3 YEARS? READ THIS BEFORE DECIDING

Blog https://targetinvest88.blogspot.com

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I am sure that you are aware that I am invested in CENSOF for quite some time (More than 1 year).

From the start when the price is around RM 0.22, I am invested into CENSOF and continue to be invested by adding more shares into my portfolio.

You can refer to my sharing of CENSOF here.

Target Invest KLSE: CENSOF GROWTH OPPORTUNITY WITH COMPULSORY E-INVOICE IMPLEMENTATION (targetinvest88.blogspot.com)

Target Invest KLSE: WHY I AM INVESTED INTO CENSOF (targetinvest88.blogspot.com)

Target Invest KLSE: E-invoice candidate, who is the best deal now? (targetinvest88.blogspot.com)

The main question is here. Currently, CENSOF is trading at RM 0.30, is this the time to take profit? Can I stay invested into CENSOF longer? What are the business prospect outlook for CENSOF?

By now, most of the technical trader had exited CENSOF. However, there will still be a new batch of trader who will be entering CENSOF for the upward ride.

I will be sharing you my view on CENSOF for the next 3 years and also why this share can be worth to hold for dividend as well.

Malaysia government will be rolling out digital government services, and a lot of it will require transfer of services and storage from physical into digital.

And CENSOF will be one of the main integration partners in all this transfer.

We will be referring to storage of E-invoices, Digital ID, E-passport, and even your house purchasing e-SPA.

This will make CENSOF very good in having GOVERNMENT services and also can enjoy commercial side of business (E invoice). With the current position of net cash and growing strong business model, CENSOF can be a future good dividend company.

For technical view

CENSOF already completed a series of downtrend. The current up trend will be supported with

1. Government digitalization effort

2. Commercial e-invoice and ERP system

I am still invested in CENSOF, and will keep invested into CENSOF for dividend play for the future.

IMPORTANT NOTICE

Blog https://targetinvest88.blogspot.com

Telegram https://t.me/targetinvest88

Monday, April 29, 2024

HOW MUCH DO YOU THINK PAOS WILL GET FROM LAND REVALUATION OR CASH FROM POTENTIAL LAND SALE FOR MALAYSIA HIGH SPEED RAIL DEVELOPMENT

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In my previous posting on PAOS, I mentioned on the potential of factory land acquisition by myHSR for the construction of HIGH SPEED RAIL HSR PUTRAJAYA station around the area of Banting.