Blog https://targetinvest88.blogspot.com
Telegram https://t.me/targetinvest88
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.
No comments:
Post a Comment