Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior 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

The Asia HY Trade Recommendations report for the month of April includes a summary of our recommendations. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

  The Asia HY Trade Recommendations report for the month of April includes a summary of our recommendations. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Recommendations - April 2020 - Lucror Analytics

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

With restructuring plans and FY19 operating losses already announced, the volatility around Softbank Group has eased but concerns on Vision Fund portfolio companies could continue to rise. In the week since we discussed potential write-down candidates at Vision Fund, Oyo Hotels has expanded its cost reduction measures whilst another portfolio company, Automation Anywhere, is laying off 10% of employees.  On the plus side, Vision Fund's 8th largest holding Paytm appears close to securing a $100mn investment from Microsoft.  Meanwhile, there is some evidence that buybacks have started as Softbank shares are up 9% from two weeks ago when it pre-announced FY19 operating losses. The shares still trade at a 50% discount to fair value, however,  and are likely to remain around this level until details on the asset sale/buyback timing are released.

With restructuring plans and FY19 operating losses already announced, the volatility around Softbank Group has eased but concerns on Vision Fund portfolio companies could continue to rise. In the week since we discussed potential write-down candidates at Vision Fund, Oyo Hotels has expanded its cost reduction measures whilst another portfolio company, Automation Anywhere, is laying off 10% of employees.  On the plus side, Vision Fund's 8th largest holding Paytm appears close to securing a $100mn investment from Microsoft.  Meanwhile, there is some evidence that buybacks have started as Softbank shares are up 9% from two weeks ago when it pre-announced FY19 operating losses. The shares still trade at a 50% discount to fair value, however,  and are likely to remain around this level until details on the asset sale/buyback timing are released. 

Softbank Group: An Update on Vision Fund Companies and Trading Volumes

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Mitsubishi UFJ Financial (MUFG) / Equity Bottom-Up

* ACOM’s Chronic Kaburai Underestimation: After the market close on April 24th, Mitsubishi UFJ Financial Holdings Group’s (8306.JP) [MUFG] subsidiary ACOM (8572.JP) announced a revisions to its FY (March) 2020 earnings forecasts, lowering its operating profit by JPY 12 bn (13.7%) reflecting a JPY 19.7 bn in kaburai interest repayment provisions; and* Pig Piling At MUFG: ACOM is far from the only headache at MUFG: post-COVID-19, we calculate that MUFG America’s will have a regulatory capital shortfall of up to USD 6.5 bn or 40% of MUFG America’s stated equity; impairments on subsidiaries; significant Softbank (9984.JP) exposure; and Morgan Stanley’s (MS.US) MUFG dilutive E*Trade (ETFC.US) transaction.

* ACOM’s Chronic Kaburai Underestimation: After the market close on April 24th, Mitsubishi UFJ Financial Holdings Group’s (8306.JP) [MUFG] subsidiary ACOM (8572.JP) announced a revisions to its FY (March) 2020 earnings forecasts, lowering its operating profit by JPY 12 bn (13.7%) reflecting a JPY 19.7 bn in kaburai interest repayment provisions; and* Pig Piling At MUFG: ACOM is far from the only headache at MUFG: post-COVID-19, we calculate that MUFG America’s will have a regulatory capital shortfall of up to USD 6.5 bn or 40% of MUFG America’s stated equity; impairments on subsidiaries; significant Softbank (9984.JP) exposure; and Morgan Stanley’s (MS.US) MUFG dilutive E*Trade (ETFC.US) transaction.

Thematic (Sector/Industry)

Japanese telcos have plenty of financial flexibility and political/social cover to maintain current policies on returns to shareholders. We expect modest annual increases in dividends to continue but the level of buybacks may be less than FY19 which were at historically high levels (we are not including Softbank Group’s policies here). The impact of Covid-19 on returns policy should be limited although pricing/service revenue growth may be under some pressure from government policies to promote telework and online education. We have seen evidence of this already as the incumbent annual student discount plan campaigns now include free data.  Despite Covid-19 and Rakuten mobile entry, the Japanese telcos remain a safe harbor for investors.

Japanese telcos have plenty of financial flexibility and political/social cover to maintain current policies on returns to shareholders. We expect modest annual increases in dividends to continue but the level of buybacks may be less than FY19 which were at historically high levels (we are not including Softbank Group’s policies here). The impact of Covid-19 on returns policy should be limited although pricing/service revenue growth may be under some pressure from government policies to promote telework and online education. We have seen evidence of this already as the incumbent annual student discount plan campaigns now include free data.  Despite Covid-19 and Rakuten mobile entry, the Japanese telcos remain a safe harbor for investors. 

Japan Telecoms: Drilling Down on Free Cash Flow and Shareholder Returns

Lakshmi Iyer, CFA

We have examined  the impact of  change of control clauses across various companies' bonds (<a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> , <a href="https://www.smartkarma.com/entities/future-retail-ltd-4b025726-3be6-41e3-9f59-22ab2a17a8b2" target="_blank" data-smartkarma-citation="entities:26799:1" rel="noopener">Future Retail (FRETAIL IN)</a> and <a href="https://www.smartkarma.com/entities/car-inc" target="_blank" data-smartkarma-citation="entities:942:1" rel="noopener">Car Inc (699 HK)</a> in terms of market reactions and non-reactions.  Given the current scenario, we think investors should keep an eye on the stock prices of issuers as well as promoters' shareholding data, wherever possible.

We have examined  the impact of  change of control clauses across various companies' bonds (Softbank Group (9984 JP) , Future Retail (FRETAIL IN) and Car Inc (699 HK) in terms of market reactions and non-reactions.  Given the current scenario, we think investors should keep an eye on the stock prices of issuers as well as promoters' shareholding data, wherever possible.

Change of Control Clauses - Adding to Volatility

Japan

SoftBank Group Corp. provides telecommunication services. The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Softbank Group (9984 JP)

Asia HY Trade Recommendations - April 2020 - Lucror Analytics

The Asia HY Trade Recommendations report for the month of April includes a summary of our recommendations. The report also features relative-value...

Lucror Analytics

Softbank Group: An Update on Vision Fund Companies and Trading Volumes

With restructuring plans and FY19 operating losses already announced, the volatility around Softbank Group has eased but concerns on Vision Fund...

Kirk Boodry

MUFG – When It Rains, It Pours

* ACOM’s Chronic Kaburai Underestimation: After the market close on April 24th, Mitsubishi UFJ Financial Holdings Group’s (8306.JP) [MUFG]...

Thomas J. Monaco

Japan Telecoms: Drilling Down on Free Cash Flow and Shareholder Returns

Japanese telcos have plenty of financial flexibility and political/social cover to maintain current policies on returns to shareholders. We expect...

Kirk Boodry

Change of Control Clauses - Adding to Volatility

We have examined the impact of change of control clauses across various companies' bonds (Softbank Group (9984 JP) , Future Retail (FRETAIL IN)...

Lakshmi Iyer, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)