Lotte Chemical Maintains ‘Top-Pick’ Stock Position
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Lotte Chemical Maintains ‘Top-Pick’ Stock Position
Outlook on global ethylene business continues to show rally; company predicted to benefit from favorable factors

27(Tue), Mar, 2018

Vice Chairman Huh Soo-young, head of Lotte Group’s Chemical Business Unit. (Photo: Lotte Chemical)

Lotte Chemical is forecast to benefit from favorable factors such as a booming U.S. ethylene industry, Kiwoom Securities Co. said in a report. 

The report showed that despite the United States’ increased supply, the outlook on the global ethylene business will continue to rally. It is attributable to a periodic rise in polymer demand, caused by China’s environmental regulations. 

Lotte Chemical shares have maintained the “top-pick” position among chemical-related shares. The company logged the highest-ever levels since last December, thanks to ethylene and propylene, which have seen a favorable rebound in demand. 

Lotte Chemical Titan’s results met analysts’ consensus estimates. The company saw sales amount to 2.117 billion ringgits in the fourth quarter of last year and operating profit stand at 356 million ringgits, representing a 5 percent rise and a 48.3 percent surge over the same period of the previous year, respectively. Lotte Chemical Titan shares need to be seen through he lens of  “quantitative improvement.” The target share price is 580,000 won per share, Kiwoom Securities said. 

Lotte Chemical announced a provisional consolidated financial statement for the 4th quarter of 2017 in which the company logged 4.03 trillion won in sales, 714.4 billion won in operating profit and 493.2 billion won in net profit. 

The figures represented a 9.9 percent rise, a 2.6 percent drop and a 14.9 percent plunge over the same period of the previous year, respectively, the company said. 

Lotte Chemical Logs Best-ever Business Performance in 2017

Lotte Chemical chalked up 15.87 trillion won in sales, 2.92 trillion won in operating profit, and 2.28 trillion won in net profit for the whole of last year in what was billed as its best-ever year. 

Lotte Chemical saw profitability decline compared to the previous quarter due to a strong won and crude oil price hikes, but continued to make a better business performance thanks to a smooth demand and supply situation, the company said. 

The following is Lotte Chemical’s business-by-business performance analysis for the 4th quarter of 2017:

Lotte Chemical’s olefin business posted 2.039 trillion won in sales and 450.2 trillion won in operating profit. The aromatics business logged 754.2 billion won in sales and 89 billion won in operating profit. 

Lotte Chemical Titan registered 559.2 billion won in sales and 93 trillion won in operating profit. The corresponding figures for Lotte Chemical’s advanced material business were 712.1 trillion won and 82.6 billion won, respectively.

Lotte Chemical saw uncertainties related to domestic and foreign variables, but the company is expected to achieve a solid business performance riding on a favorable demand and supply situation, and the company will strengthen the competitiveness of the conventional businesses and set up platforms to create profits on a continued basis by executing Korean and foreign new business projects now under way without interruption, the company said. 

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