Saturday, August 31, 2024

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

Blog https://targetinvest88.blogspot.com


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.

Then head on to BASF PETRONAS

It also acquired Perstorp in Sweden for RM 10.5 billion

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

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


Others



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

 Blog https://targetinvest88.blogspot.com



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. 


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
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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Monday, August 12, 2024

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

Blog https://targetinvest88.blogspot.com



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.


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.

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



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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