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 August includes a summary of our recommendations, as well as our high-conviction ideas. We also provide relative-value charts and lists of the bonds in the Lucror Asia HY index.

   The Asia HY Trade Recommendations report for August includes a summary of our recommendations, as well as our high-conviction ideas. We also provide relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Recommendations - August 2019 - Lucror Analytics

Trung Nguyen

We view Azure Power as “Medium Risk” on the LARA scale. We like the stable and predictable revenues and EBITDA, which are supported by: [1] a stable amount of solar radiation; [2] fixed tariffs based on long-term PPAs (25 years); and [3] minimal operating costs, as solar panels have no moving parts. However, the credit profile is weighed down by the company's high leverage, limited scale and short track record. The key risk is that the PPAs could be cancelled or re-negotiated. Our fundamental Credit Bias is “Stable”, due to the stable and predictable revenues and EBITDA. We view Azure’s corporate governance as “Moderate” on the LAGA scale, mainly owing to the reputable and diversified institutional shareholder base, experienced Board directors and public listing on the NYSE.

   We view Azure Power as “Medium Risk” on the LARA scale. We like the stable and predictable revenues and EBITDA, which are supported by: [1] a stable amount of solar radiation; [2] fixed tariffs based on long-term PPAs (25 years); and [3] minimal operating costs, as solar panels have no moving parts. However, the credit profile is weighed down by the company's high leverage, limited scale and short track record. The key risk is that the PPAs could be cancelled or re-negotiated.    Our fundamental Credit Bias is “Stable”, due to the stable and predictable revenues and EBITDA.    We view Azure’s corporate governance as “Moderate” on the LAGA scale, mainly owing to the reputable and diversified institutional shareholder base, experienced Board directors and public listing on the NYSE. 

Azure Power - Tear Sheet - Lucror Analytics

In our view, Azure Power’s Q1/19-20 results were acceptable. Positively, revenue and operating capacity rose more quickly than expected. That said, earnings growth failed to match the revenue increase, due to one-time costs related to the management changes. Debt grew faster than earnings, leading to slight deterioration in leverage. That said, we maintain our forecasts for FY 2019-20 and foresee that leverage will be stable. On the call, the new management team said it plans to reduce leverage and improve disclosures, which bodes well for creditors.

   In our view, Azure Power’s Q1/19-20 results were acceptable. Positively, revenue and operating capacity rose more quickly than expected. That said, earnings growth failed to match the revenue increase, due to one-time costs related to the management changes. Debt grew faster than earnings, leading to slight deterioration in leverage. That said, we maintain our forecasts for FY 2019-20 and foresee that leverage will be stable. On the call, the new management team said it plans to reduce leverage and improve disclosures, which bodes well for creditors. 

Azure Power - Earnings Flash - Q1 FY 2019-20 Results - Lucror Analytics

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.

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. 

Lucror Analytics - Morning Views Asia - 13 Aug 2019

In this month’s “In-Focus” section, we provide an update on the Indonesian real estate sector, including the background of the last cycle, sales trends, regulatory actions and expectations. We also comment broadly on the FY 2018 and Q1/19 results of real estate companies under our coverage.

   In this month’s “In-Focus” section, we provide an update on the Indonesian real estate sector, including the background of the last cycle, sales trends, regulatory actions and expectations. We also comment broadly on the FY 2018 and Q1/19 results of real estate companies under our coverage. 

Asia HY Monthly - Indonesian Property Update (2019) - Lucror Analytics

India

Globus Constructors & Developers Limited provides construction of commercial building.

Infrastructure India PLC specializes in growth capital investments. The fund seeks to invest in infrastructure projects with a focus on the energy and transport sectors. It seeks to invest in India.

Orient Green Power Co Ltd. produces electricity using renewable fuels.  The Company develops, owns and operates wind, biomass and small hydroelectric power plants in India.

Gujarat Industries Power Company Limited generates and supplies electricity to its promoting companies, which include the Gujarat State Fertiliser Co. (GSFC), Gujarat Alkalies & Chemicals (GACL), Gujarat Electricity Board and Petrofils Co-operative.

PTC India Ltd buys and sells electricity.

RattanIndia Power Limited develops, constructs and operates power projects domestically and internationally. The Company is participating in various Coal based Thermal,Hydro and Renewable Energy projects as well as is actively pursuing various coal mining opportunities.

RattanIndia Infrastructure Limited, through a subsidiary, develops electricity generating plants.  The Company is building a coal-fired plant in Nandgaonpeth in the Amravati District of Maharashtra State, and a coal-fired plant in Sinnar in the Nasik District of Maharashtra State.

Reliance Power Limited develops, constructs, and operates power projects both domestically and internationally.

Jaiprakash Power Ventures Ltd. generates electricity.  The Company operates a private sector hydroelectric power plant.

Neyveli Lignite Corporation Limited generates and distributes power, mines and processes lignite, manufactures fertilizers & chemicals and processes and sells clay of all kinds. The Company's other activities include the briquetting and carbonization of lignite and its main products include electric power, lignite, nekolin, pulverized nekolin, urea, coke fines and leco.

Thai Solar Energy PCL is a power company that provides renewable energy solutions through the use of solar power.

Ecoenergy Holdings Co., Ltd. is a renewable energy project developer focusing on biogas-to-energy projects, such as power generation and vehicle-grade fuel production, by converting waste and landfill gas into energy. The Company provides construction, operation and management services for such facilities and carbon emissions reduction-related services.

Eden Inc Berhad is an investment holding company. Through its subsidiaries, the Company operates restaurants, caters food, retails souvenir and dried seafood, and develops properties. Eden Enterprises also manufactures  cakes, pastries, and electrical and engineering parts as well as operates power plant as an independent power producer.

Prime Road Power Public Company Limited invests in the consumer sector across Asia. The Company focuses on franchised budget hotels as well as food and beverage outlets and independent restaurants.

China Renewable Energy Investment Ltd, through its subsidiaries, principally engaged in the business of alternative energy. The Company is an alternative energy project developer focused on China.

China Renewable Energy Investment (987 HK)

NZ Windfarms Ltd. is a long term owner and operator of a renewable generation asset, with its principal revenue coming from the sale of sustainably generated electricity. The Company's core business activity is the operation and ownership of its wind farm in New Zealand.

Energy World Corporation Ltd. generates electricity.  The Company operates gas-fired power plants in Sengkang, South Sulawesi, Indonesia; and Alice Springs, Northern Territory, Australia.  Energy World also produces natural gas and liquefied natural gas in Australia.

Alsons Consolidated Resources, Inc., an investment holding company, engages in energy and power, property development, and other investment businesses primarily in the Philippines. It operates through two segments, Energy and Power; and Property Development. The company operates a 100 megawatt (MW) diesel-fired electricity generating facility in Zamboanga City; and a 55 MW diesel-fired electricity generating facility located in Alabel, Sarangani Province, as well as 103 MW bunker-fired iligan diesel power plants. It also develops Eagle Ridge Golf and Residential Estate, a 72 hole golf course with a residential component. In addition, the company holds Manat Mining Claims that covers a total area of 1,547.32 hectares located in the Municipality of Nabunturan, Compostela Valley and in the Municipality of Maco, Davao del Norte. Further, it manages and develops power plant projects. The company was formerly known as Terra Grande Resources, Inc. and changed its name to Alsons Consolidated Resources, Inc. in June 1995. Alsons Consolidated Resources, Inc. was founded in 1974 and is based in Makati City, the Philippines.

Baraka Power Limited generates and supplies electricity in Bangladesh. It generates electricity through its 51MW power plant located at Fenchugonj, Sylhet; and supplies to the national grid. The company was formerly known as Barakatullah Electro Dynamics Limited and changed its name to Baraka Power Limited in April 2015. Baraka Power Limited was founded in 2007 and is based in Dhaka, Bangladesh.

New Energy Solar Limited operates as an renewable energy development company. The Company acquires and develops solar and renewable energy sectors. New Energy Solar also renders in wind, geothermal, hydro-electricity, and hybrid solutions. New Energy Solar serves customers in Australia and the United States.

Azure Power Global Limited operates as an independent solar power producer. The Company designs, constructs, maintains, and operates solar energy projects. Azure Power Global serves customers worldwide.

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Azure Power Global Ltd (AZRE US)

Asia HY Trade Recommendations - August 2019 - Lucror Analytics

The Asia HY Trade Recommendations report for August includes a summary of our recommendations, as well as our high-conviction ideas. We also...

Lucror Analytics

Azure Power - Tear Sheet - Lucror Analytics

We view Azure Power as “Medium Risk” on the LARA scale. We like the stable and predictable revenues and EBITDA, which are supported by: [1] a...

Lucror Analytics

Azure Power - Earnings Flash - Q1 FY 2019-20 Results - Lucror Analytics

In our view, Azure Power’s Q1/19-20 results were acceptable. Positively, revenue and operating capacity rose more quickly than expected. That...

Lucror Analytics

Lucror Analytics - Morning Views Asia - 13 Aug 2019

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 - Indonesian Property Update (2019) - Lucror Analytics

In this month’s “In-Focus” section, we provide an update on the Indonesian real estate sector, including the background of the last cycle, sales...

Lucror Analytics

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