Should You Think About Buying Lotte Chemical Titan Holding Berhad (KLSE:LCTITAN) Now?

While Lotte Chemical Titan Holding Berhad (KLSE:LCTITAN) might not be the most widely known stock at the moment, it led the KLSE gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Lotte Chemical Titan Holding Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Lotte Chemical Titan Holding Berhad

What is Lotte Chemical Titan Holding Berhad worth?

Good news, investors! Lotte Chemical Titan Holding Berhad is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Lotte Chemical Titan Holding Berhad’s ratio of 9.74x is below its peer average of 16.9x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What’s more interesting is that, Lotte Chemical Titan Holding Berhad’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Lotte Chemical Titan Holding Berhad?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Lotte Chemical Titan Holding Berhad, at least in the near future.

What this means for you:

Are you a shareholder? Although LCTITAN is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to LCTITAN, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on LCTITAN for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Lotte Chemical Titan Holding Berhad, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for Lotte Chemical Titan Holding Berhad you should be mindful of and 1 of these is concerning.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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