KUALA LUMPUR: CIMB Securities has increased their loss projections for Lotte Chemical Titan Holdings (LCT) for the financial years 2024, 2025, and 2026 (FY24/FY25/FY26) by 18 per cent, 36 per cent, and 166 per cent respectively.
According to the firm, the adjustment accounts for higher interest costs due to a RM0.6 billion loan for working capital, a RM6.7 billion capital expenditure for the LINE project following the commissioning of a new plant, and increased losses from associates.
"Excluding exceptional items totaling RM41 million, LCT recorded a 1.0 per cent decrease in core net loss in the first quarter of 2024 (1Q24), amounting to RM219 million, despite higher revenue from olefins sales (10.6 per cent quarter-on-quarter, 13 per cent year-on-year).
"However, these losses were wider than anticipated, accounting for 30 per cent and 35 per cent of our and consensus projections for FY24 core net losses of RM733 million and RM623 million," it said.
CIMB Securities noted the main factors contributing to this variance were increased administrative and interest costs associated with the LINE project.
The firm anticipates sales volumes to improve in the second half of 2024 (2H24), supported by enhanced plant efficiency following the planned turnaround.
"We expect product spreads to remain under pressure due to reduced demand from downstream markets, resulting in negative effects on naphtha prices, despite a global increase in crude oil prices," it added.
CIMB Securities has a 'hold' call on LCT and has lowered the target price by 10.5 per cent, to RM1.19.
