Malaysia: Lotte
Chemical Titan Holdings Bhd, which has secured four cornerstone investors, will
be paying out half of its profits as dividends, which works out to a dividend
yield of around 3.3%, sources said.
This is based on the
RM1.31bil in net profit the company recorded in financial year 2016.
Lotte Chemical,
which will be launching its prospectus this week, is coming to the market at a
price earnings (PE) multiple of around 12 times historical earnings, sources
added.
In comparison,
Petronas Chemicals Group Bhd trades at a PE multiple of 16 times historical
earnings at its current price of RM7.22 per unit, and carries a dividend yield
of 2.63%, Bloomberg data showed.
It has been reported
that Lotte Chemical has already secured four cornerstone investors, namely
Great Eastern Holdings Ltd, Eastspring Investments Bhd, Permodalan Nasional Bhd
and Malayan Banking Bhd's asset management arm, Maybank Asset. The initial
public offering (IPO) is looking to raise RM6bil, out of which slightly more
than RM1bil will be taken up by the cornerstone investors.
The IPO entails a
retail offering of 55.8 million shares, institutional size of 400.8 million
shares, and MITI-approved selected bumiputra investors portion of 283.9 million
shares.
At a tentative list
price range of RM7.80 to RM8, Lotte Chemical will have an estimated market
capitalisation of RM19.7bil, compared with Petronas Chemicals’ market cap of
RM57.7bil.
Lotte Chemical,
which produces polyethylene and polypropylene, is due to be listed on July 11.
The bulk of the
proceeds from the IPO has been earmarked to partly fund Lotte Chemical's
RM15.5bil integrated petrochemical facility in Banten province, Indonesia while
some will also be used to expand its existing plant in Malaysia.
Lotte Chemical
presently owns and operates 14 plants across Indonesia and Malaysia.
These plants have a
combined production capacity of about three million tonnes per annum.
Its plastic products
are exported to about 60 countries. Lotte Chemical's IPO will be the largest in
Malaysia since Felda Global Ventures Holdings Bhd and IHH Healthcare Bhd back
in 2012, with funds raised amounting to RM10bil and RM6bil respectively.
The South Korean
Lotte Group bought Bursa-listed Titan Chemicals Corp in a deal valued at about
RM3bil in 2010 and later de-listed the company in 2011.
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