Credit Analyst, Lucror Analytics

Chuanyi Zhou

Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Sunac’s H1/21 results are in line with our expectations, with improvements in contracted sales and revenue recognition, although margins contracted. Debt remained at the same level as at FYE 2020, and interest expense declined. Credit metrics continued to improve. We view the company’s deleveraging efforts positively, and expect credit metrics to strengthen further. That said, Sunac has expanded aggressively, with close to 38% of the attributable contracted sales spent on land acquisitions. During the investor presentation, Sunac announced its aims of bringing the average financing cost down to 5% (H1/21: 8%) and achieving an investment grade rating in three years. In our view, this is very ambitious given the company’s financial profile and despite the improvements over the past two years.  As of end-June, Sunac was in compliance with two of the Three Red Lines requirements, with Liabilities/Assets (excluding customer advances) at 76% (70% threshold set by the regulator). Cash/Short-term Debt and Net Debt/Equity were within the thresholds at 1.1x and 97%, respectively.

  Sunac’s H1/21 results are in line with our expectations, with improvements in contracted sales and revenue recognition, although margins contracted. Debt remained at the same level as at FYE 2020, and interest expense declined. Credit metrics continued to improve. We view the company’s deleveraging efforts positively, and expect credit metrics to strengthen further. That said, Sunac has expanded aggressively, with close to 38% of the attributable contracted sales spent on land acquisitions.   During the investor presentation, Sunac announced its aims of bringing the average financing cost down to 5% (H1/21: 8%) and achieving an investment grade rating in three years. In our view, this is very ambitious given the company’s financial profile and despite the improvements over the past two years.    As of end-June, Sunac was in compliance with two of the Three Red Lines requirements, with Liabilities/Assets (excluding customer advances) at 76% (70% threshold set by the regulator). Cash/Short-term Debt and Net Debt/Equity were within the thresholds at 1.1x and 97%, respectively. 

Sunac China - Earnings Flash - H1 FY 2021 Results - Lucror Analytics

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

The property sector in China has been in the spotlight over the last few years. Regulators have made various attempts to temper price growth but the silver bullet has been elusive so far.The powers that be realise that the lack of affordable housing is one of the reasons for China's birth rate dropping and there is now a renewed effort to ensure that property prices do not continue to run up. As part of the measures that started with the 'Three Red Lines' almost a year ago, Bloomberg reports that China has halted PE funds from raising money to invest in residential property developments.We take a look at some of the regulatory changes that have been implemented over the last year and see how the companies in the sector are faring. We then look for stocks with similar characteristics but different stock returns over the last year to find trade opportunities.

The property sector in China has been in the spotlight over the last few years. Regulators have made various attempts to temper price growth but the silver bullet has been elusive so far.The powers that be realise that the lack of affordable housing is one of the reasons for China's birth rate dropping and there is now a renewed effort to ensure that property prices do not continue to run up. As part of the measures that started with the 'Three Red Lines' almost a year ago, Bloomberg reports that China has halted PE funds from raising money to invest in residential property developments.We take a look at some of the regulatory changes that have been implemented over the last year and see how the companies in the sector are faring. We then look for stocks with similar characteristics but different stock returns over the last year to find trade opportunities.

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-7613'>China Aoyuan Property</a></li><li><a href='#lucror-entity-8108'>Hopson Development</a></li><li><a href='#lucror-entity-1776'>Indika Energy</a></li><li><a href='#lucror-entity-29231'>KWG Living Group</a></li><li><a href='#lucror-entity-240'>Sunac China Holdings</a></li><li><a href='#lucror-entity-473'>Wynn Macau Ltd</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.China Aoyuan PropertyHopson DevelopmentIndika EnergyKWG Living GroupSunac China HoldingsWynn Macau Ltd

Morning Views Asia: China Aoyuan Property, Hopson Development, Indika Energy, KWG Living Group

In this month’s "In-Focus" section, we discuss Chinese developers’ urban redevelopment businesses, including local governments' role in urban renewal projects and the various redevelopment models, as well as the impact of such projects on companies' financials. We also give an overview of recent bond defaults. The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the "In-Focus" section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.

  In this month’s "In-Focus" section, we discuss Chinese developers’ urban redevelopment businesses, including local governments' role in urban renewal projects and the various redevelopment models, as well as the impact of such projects on companies' financials. We also give an overview of recent bond defaults.   The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the "In-Focus" section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. 

Asia HY Monthly - Chinese Developers’ Urban Redevelopment Businesses - Lucror Analytics

The Asia HY Trade Book for the month of July includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

  The Asia HY Trade Book for the month of July includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Book - July 2021 - Lucror Analytics

China

Sunac China Holdings Limited is a real estate development company.

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Sunac China Holdings (1918 HK)

Sunac China - Earnings Flash - H1 FY 2021 Results - Lucror Analytics

Sunac’s H1/21 results are in line with our expectations, with improvements in contracted sales and revenue recognition, although margins...

Lucror Analytics

China Property Sector: Trading Ideas

The China property sector has been in the regulatory crosshairs and new rules continue to be rolled out. We look for trading opportunities in the...

Brian Freitas

Morning Views Asia: China Aoyuan Property, Hopson Development, Indika Energy, KWG Living Group

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

Asia HY Monthly - Chinese Developers’ Urban Redevelopment Businesses - Lucror Analytics

In this month’s "In-Focus" section, we discuss Chinese developers’ urban redevelopment businesses, including local governments' role in urban...

Lucror Analytics

Asia HY Trade Book - July 2021 - Lucror Analytics

The Asia HY Trade Book for the month of July includes a summary of our recommendations, as well as our high-conviction ideas. The report also...

Lucror Analytics

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