MSWG Weekly Newsletter 21 July 2017 (English)


Despite a year-to-date return of almost 7% for the KLCI this year, Lotte Chemical Titan Holding Bhd (LCT), Malaysia’s biggest IPO since 2012, has not performed to expectations.

Its already reduced reference price of RM6.50 is still trending lower, clearly pressured by the poor sentiment on the stock and weak market conditions in the chemical sector, even after being shored up by its stabilising manager Maybank Investment Bank Bhd.

Lotte’s owners should be concerned: they not only read the market incorrectly, hoping that demand would exist because of the paucity of large new listings on the KLCI, but in also failing to expand capacity, unlike its global competitors.

But the regulators should also be concerned.

Lotte is not new to the exchange, having been delisted more than six years ago. It is also the second counter that has ended below its IPO price (after KIP REIT) this year, which does not bode well for Bursa’s reputation.