Lotte Chemical Pakistan Limited (PSX:LOTCHEM)

Share Price (Rs.)	1 Month	3 Month	1 Year
24.43	-4.54%	4.54%	57.56%

LOTCHEM announced,  for the year ending December 2022, an annual earnings per share of Rs. 6.68 (vs. Rs. 3.07 last year)  and a cash dividend of Rs. 2 per share, in addition to the Rs. 4 per share cash dividend announced at the half-year.

The company has changed hands, so new owners may change dividend payout policy.

LOTCHEM earned a profit after tax of Rs. 10.1 billion for the year ending December 2022. This is higher by 117% over PAT of Rs. 4.64 billion last year.

This substantial rise in PAT is primarily because of increase in Sales by 49% over last year and higher gross profit margin of 17.7% compared to GP margin of 11.28% last year.

This growth in the PAT is despite a 144% increase in “other operating expenses” and more than doubling ‘“finance costs’. The tax rate for LOTCHEM this year was also high, at 36%, compared to 29% last year.

On a quarterly basis, EPS in the fourth quarter was Rs. 1.33, declining 26% from Rs. 1.8 in the third quarter. EBIT in the fourth quarter was down 38% over 3rd quarter ending September 2022. This was because of decline in gross profit margin and substantial decline of 30% in sales.

Lucky Core Industries Ltd has entered into a share purchase agreement with LOTCHEM's parent company to purchase its entire 75% stake in LOTCHEM (January 2023). See Notice

LOTCHEM has suspended production for March 15, 2023 till further notice, citing to precarious foreign exchange reserves position of the country that hampered LC openings.  See notice.

LOTCHEM is trading at Rs. 24.4 (PSX:Quote). One-year return of the stock is 58% compared to negative return of 4.85% of KSE100 Index. 52-week range of the stock is Rs. 14.30 — Rs. 35.24.

LOTCHEM is trading at a low earning multiple (P/E) of 3.67 and a price-to-book value (PBV) of 1.9.

Brief Background:

LOTCHEM manufactures Pure Terephthalic Acid (PTA). Its plant is located at Industrial Zone, Port Qasim, Karachi, Pakistan. LOTCHEM is the core supplier of the domestic Polyester and PTA industries besides exporting to Asia and Middle-east region. It was incorporated in Pakistan in 1998. 

LOTTE Chemical Corporation,Korea holds 75% shares of LOTCHEM,

Market Cap: Rs. 37.3 bn

Common Shares Issued: 1.5bn, Free Float: 25%

Listed on:Pakistan Stock Exchnage

PSXTicker: LOTCHEM

Sector: Chemical

Year End; Dec

For More information see:
www.lotte-ppta.com

https://dps.psx.com.pk/company/LOTCHEM

https://invst.ly/-jgyy

LOTCHEM	qoq%	Q4-Dec22	Q3-Sep22	Q2-Jun22	Q1-Mar22	Q4-Dec21
Miilion Rs.			Q3 - 2022	Q2 - 2022	Q1 - 2022	Q4 - 2021
Net Sales	-29.8%	20,752	29,555	29,627	20,332	40,274
Gross Profit / Loss	-37.3%	3,013	4,805	5,996	4,010	6,509
Operating Profit / Loss	-65.1%	1,601	4,588	5,835	3,846	6,297
Financial Charges	-79.7%	162	795	721	277	788
Profit Before Taxation	-30.4%	2,834	4,074	5,180	3,669	5,038
Taxation	-40.1%	-821	-1,370	-2,393	-1,054	-1,433
Profit After Tax	-25.6%	2,013	2,704	2,786	2,615	3,605
EPS (Rs.)	-25.6%	1.33	1.79	1.84	1.73	2.38
Cash Dividend (Rs./share)		2	0	4	0	0
GP Margin		14.5%	16.3%	20.2%	19.7%	16.2%
Tax Rate		-29.0%	-33.6%	-46.2%	-28.7%	-28.4%
Sales growth		-29.8%	-0.2%	45.7%	-49.5%
EBIT Growth		-38.5%	-17.5%	49.5%	-32.3%