KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) has kept its “Sell” call on Lotte Chemical Titan Holding Bhd, citing multi-year low olefin prices and sustained margin pressure.
The research house said polyethylene (PE)-naphtha spreads remain tight amid elevated naphtha prices, limiting profitability.
“Based on our analysis, Lotte Chemical’s net profit breakeven high-density PE-naphtha spread should be above US$500 per tonne. As such, we believe the group may continue to post losses over the next few quarters,” it said in a note.
Maybank IB noted that Lotte Chemical’s LINE project in Indonesia achieved commercial operations on Oct 15, marking a major milestone.
However, it said the development could weigh on near-term earnings as the company begins recognising annual depreciation of about RM700 million.
“Given current market conditions and subdued selling prices, production may remain challenged in achieving cost coverage. We therefore anticipate continued earnings pressure, with net losses likely to widen further in financial year 2026 (FY26),” it said.
The firm maintained its FY25-27 earnings estimates and its target price of 39 sen.
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