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The latest analyst coverage could presage a bad day for Lotte Chemical Titan Holding Berhad (KLSE:LCTITAN), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.
After the downgrade, the consensus from Lotte Chemical Titan Holding Berhad's four analysts is for revenues of RM7.7b in 2023, which would reflect a perceptible 6.3% decline in sales compared to the last year of performance. Losses are predicted to fall substantially, shrinking 38% to RM0.33 per share. Yet prior to the latest estimates, the analysts had been forecasting revenues of RM8.7b and losses of RM0.14 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
See our latest analysis for Lotte Chemical Titan Holding Berhad
The consensus price target fell 5.1% to RM1.11, implicitly signalling that lower earnings per share are a leading indicator for Lotte Chemical Titan Holding Berhad's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Lotte Chemical Titan Holding Berhad at RM1.56 per share, while the most bearish prices it at RM0.86. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 6.3% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 2.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.5% per year. It's pretty clear that Lotte Chemical Titan Holding Berhad's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that analysts increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Lotte Chemical Titan Holding Berhad.