Lotte Chemical Corp., a petrochemical unit under South Korea’s fifth-largest conglomerate, may report record-high profit in the first quarter, driven by the anticipated listing of Lotte Chemical Titan Holding in Kuala Lumpur, Malaysia, and the price hike of chemical products, an analyst said Tuesday.

The Seoul-traded firm is projected to record 853.7 billion won ($746.34 million) in operating profit, the highest quarterly figure recorded for Lotte Chemical, according to a report by Lee Eung-joo, an analyst at Shinhan Investment.

The securities firm maintained a 490,000 won target price. The share of Lotte Chemical on Tuesday closed at 359,000 won, down 1.1 percent from Monday. 

Lee cited the revived plans to list Lotte Chemical’s Malaysian arm and the short supply of plastic products, including butadiene, which saw its average price soar 59 percent on-quarter.

“The (anticipated) initial public offering of Lotte Chemical Titan highlighted its parent company’s long-term growth potential, while indicating the firm had been undervalued.” Lee said.

Lotte Chemical has been exploring an IPO of the Malaysian subsidiary on its stock market Bursa Malaysia since early 2016, but sweeping probes into its parent Lotte Group in mid-2016 over corruption and slush funds hampered the move. The firm earlier in April announced it would revive the IPO plan and make the firm open to the public in the third quarter this year, which sources say could raise more than $1.5 billion.

The proceeds would be used to build facilities in Southeast Asia, such as a naphtha cracker in Indonesia and a polypropylene plant in Malaysia, which would serve as “mid-long term growth momentum,” according to Lee.

Lotte Group acquired Malaysian firm Titan Chemicals in 2010. The unlisted Lotte Chemical Titan posted $4.07 million of operating profit on its consolidated financial statement in 2016

Also last year, Lotte Chemical outperformed LG Chem, Korea’s leading plastics maker. Lotte Chemical earned 2.55 trillion won in yearly operating profit in 2016, 550 billion won more than LG Chem, marking the first time since the firm was founded in 1976.

By Son Ji-hyoung (consnow@heraldcorp.com)