Malaysia's Lotte Chemical Titan Shares Trade Flat at Debut

By Yantoultra Ngui Features Dow Jones Newswires

KUALA LUMPUR, Malaysia-- Lotte Chemical Titan, a petrochemical unit of South Korean conglomerate Lotte Group, saw a firm debut on the Malaysian stock market on Tuesday.

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The company's shares opened flat at its initial public offering price of MYR6.50, before declining to MYR6.47 and then bouncing to MYR6.53 in the first few minutes after the opening bell. It last traded at MYR6.50 and is the most actively traded stock on the Malaysian bourse on Tuesday, with trading volume worth 106.37 million ringgit.

The Lotte Chemical IPO, which raised about 4 billion ringgit ($930.8 million), was Malaysia's largest listing since 2012 when pay TV company Astro Malaysia Holdings Bhd. (6399.KU) raised $1.5 billion.

Lotte Chemical's muted yet firm debut is expected to settles the nerves of a number of bigger companies planning to list locally. There has been a drought of bigger listings in recent years for fear that market volatility, caused by volatility in energy prices and the ringgit, could hurt their valuations.

But economic development, fund flows into local markets and the stabilization of the ringgit since the start of the year have helped lift investor sentiment.

Malaysian equities have performed well this year. Foreign investors have been net buyers of Malaysian stocks in 22 of this year's 27 weeks. The benchmark Kuala Lumpur Composite Index is up 7% year-to-date.

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But it wasn't all smooth sailing before Lotte Chemical Titan's debut. The company, which produces polyolefin used to make plastics products, faces a global oversupply and closed its IPO last week only after cutting its listing size by a fifth and pricing shares at a revised lower end of MYR6.50.

According to Hong Leong Investment Bank Research, post-2017, the global polyolefin capacity surplus is expected to widen further due to U.S .shale-based capacity expansion and methanol-based China capacity increases.

"Our argument is further supported by the significant expected capacity addition in ASEAN (Association of Southeast Asian Nations) by 2020, with Petronas Chemicals Group Bhd. (5183.KU) adding 1.4 million tonnes of polyolefin capacity, while Thailand's SCG Chemicals will add another 1.4 million tonnes," the broker said.

-- Write to Yantoultra Ngui at yantoultra.ngui@wsj.com

(END) Dow Jones Newswires

July 10, 2017 21:51 ET (01:51 GMT)