KUALA LUMPUR (Aug 6): Lotte Chemical Titan Holding Bhd (KL:LCTITAN) plunged on Wednesday, as analysts continued to advise investors to avoid the petrochemical company that just reported its 13th consecutive quarter of losses.

The company is now on track for a net loss of around RM710 million for the full year, and is expected to remain in the red for at least the next three years, according to Bloomberg consensus, as the industry grapples with subdued demand and overcapacity.

“While lower feedstock costs and reduced operating rates may offer slight margin relief, we believe LCTITAN is likely to remain in the red over the coming quarters, as product spreads show little sign of meaningful recovery to cover fixed and operating costs,” said TA Securities.

The counter opened nearly 5% lower at 68 sen before plunging as much as 17.5% to an intra-day low of 59 sen around 20 minutes before the trading period ended, marking its steepest single-day loss since January 2019. 

It later pared some losses to close at 59.5 sen, down 12 sen or almost 17% from Tuesday’s close, with 28.69 million shares changing hands. At the last traded price, the group was valued at RM1.37 billion.

There are now four “sell” calls out of the five research houses covering the stock, with BIMB Securities having the sole “trading buy” recommendations. The average target price is 41 sen, according to Bloomberg, indicating a potential decline of nearly 40% from its last price.

Before Wednesday, Lotte Chemical’s share price had gained 11% since the year began. However, the stock has been on a long-term decline since its listing in 2018, despite the occasional rebounds over the years.

“We expect losses to persist for the foreseeable future,” said Maybank Investment Bank, and kept its “sell” call on Lotte Chemical. The company faces a “double whammy” from polymer price pressure amid persistent supply glut, and margin squeeze due to elevated naphtha prices, the house flagged.

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