PETALING JAYA: Shares of Lotte Chemical Titan Holding Bhd slumped as much as 24% yesterday, after the petrochemical giant reported a 71.9% fall in net profit for the second quarter ended June 30, 2017 against RM404.03 million in the previous corresponding period. At market close, the stock was down RM1.43 or 23.3% to RM4.70 on some 32.38 million shares done, giving it a market capitalisation of RM10.85 billion. The stock’s closing price of RM4.70 yesterday represents a steep discount of 27.7% to its reduced initial public offering (IPO) price of RM6.50. The offer price was initially set at RM8 prior to its flotation last month. All seven warrants of Lotte Chemical Titan, the largest IPO in Malaysia in the past five years, also saw heightened selling pressure, with drops of between 33% and 80%. The group explained that earnings were dragged down by an 8.5% increase in cost of goods sold, arising from high inventory cost carried forward from turnaround activities in the first quarter as well as higher unit production cost due to water supply interruption last April. Other factors contributing to the decrease in earnings include fair value losses on derivatives of RM21.9 million, property, plant and equipment written off of RM20.1 million and share of loss from associate companies of RM16 million. Revenue for the quarter under review dropped 11.2% to RM1.78 billion from RM2 billion. Lotte Chemical Titan ’s first-half net profit declined 32.6% from RM676.2 million to RM455.77 million on the back of a 7.4% fall in revenue to RM3.69 billion from RM3.99 billion. The group said in a filing with the stock exchange that its operations for the financial year ending Dec 31, 2017 are expected to be primarily influenced by the demand and supply balance of petrochemical products in the market, its ability to maximise production outputs and feedstock prices, which are correlated to crude oil prices. “We anticipate that the petrochemicals market will continue to be resilient in the near term with demand growth for petrochemicals to outpace the rate of new supply additions in the region. “We expect our production output to normalise in second half 2017 although one of our crackers will have turnaround activities in July 2017,” it noted. Barring any unforeseen circumstances, Lotte Chemical Titan expects its performance for the financial year ending Dec 31, 2017 to be positive. Meanwhile, the group said in a separate filing that it had completed a mass production trial of Metallocene linear low-density polyethylene (mLLDPE), an important component in the production of plastic items such as industrial film, food packaging, and stretch and shrink film. The usage of mLLDPE will allow producers to achieve their output margins with a lower polymer input, leading to cost savings. “Our breakthrough with mLLDPE comes after several trial productions since 2012. As a company dedicated to continuous innovation, Lotte can now introduce to our customers, mLLDPE which is a cleaner and lighter alternative to conventional LLDPE. “Commercial production of mLLDPE will effectively widen our product portfolio and we are confident that this product can meet the needs of our local and regional customers given its excellent qualities,” said Lotte Chemical Titan president and CEO Lee Dong Woo. With this new development, Lotte Chemical Titan will be the first producer of mLLDPE in Malaysia and Indonesia, supplying to the domestic market demand of about 150 kilotonnes per annum. Currently, mLLDPE is manufactured at the group ’s PT Lotte Chemical Titan Nusantara plant in Cilegon, Indonesia. The group aims to begin distribution of mLLDPE within the fourth quarter of 2017 after evaluation by customers.