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

<p><br />  As in 2018, Brexit and US-China trade relations took centre stage in 2019. With a phase-one trade deal between the US and China reached and an uncontrolled Brexit averted for the time being, almost all asset classes recorded strong performance during the year, including European HY. Going forward, Brexit and US-China trade relations may well remain major market drivers. Other potential drivers include the coronavirus outbreak in China, tensions in the Middle East and the development of US-EU trade relations.<br /><br />  Our HY investment outlook opens with a discussion on the key macro developments that defined 2019, and the outlook for 2020. We then provide an overview of the HY market performance, and offer our top trade ideas for the year. Finally, we zoom in on the developments for key sectors and companies in our coverage universe, including outlooks and trade recommendations.<br /></p>

   As in 2018, Brexit and US-China trade relations took centre stage in 2019. With a phase-one trade deal between the US and China reached and an uncontrolled Brexit averted for the time being, almost all asset classes recorded strong performance during the year, including European HY. Going forward, Brexit and US-China trade relations may well remain major market drivers. Other potential drivers include the coronavirus outbreak in China, tensions in the Middle East and the development of US-EU trade relations.    Our HY investment outlook opens with a discussion on the key macro developments that defined 2019, and the outlook for 2020. We then provide an overview of the HY market performance, and offer our top trade ideas for the year. Finally, we zoom in on the developments for key sectors and companies in our coverage universe, including outlooks and trade recommendations. 

European High Yield Outlook 2020 - Lucror Analytics

Equity analyst - Containers, Drewry Maritime Financial Research

Nilesh Tiwary

Equity analyst - Containers

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Thematic (Sector/Industry)

<div>Most of the shipping stocks fell in the third week of January after the breakout of the corona virus caused multiple casualties in China. Nonetheless, we expect limited impact on container shipping companies in the longer term. However, if the severity of the outbreak increases, industrial production and retail sales could be affected, leading to rising inventory on ports. In addition, some carriers have warned of a temporary shortage of containers because, 1) Chinese New Year has been extended in China, 2) a shortage of customs and port labour could hold containers. Meanwhile, our overall view remains unchanged towards the stocks under coverage. If the situation is well managed and contained and depending on economic impact and valuations, we may consider revising our fair values. For now, the shock to demand and the macro environment would more likely be short term rather than the long term.</div>

Most of the shipping stocks fell in the third week of January after the breakout of the corona virus caused multiple casualties in China. Nonetheless, we expect limited impact on container shipping companies in the longer term. However, if the severity of the outbreak increases, industrial production and retail sales could be affected, leading to rising inventory on ports. In addition, some carriers have warned of a temporary shortage of containers because, 1) Chinese New Year has been extended in China, 2) a shortage of customs and port labour could hold containers. Meanwhile, our overall view remains unchanged towards the stocks under coverage. If the situation is well managed and contained and depending on economic impact and valuations, we may consider revising our fair values. For now, the shock to demand and the macro environment would more likely be short term rather than the long term.

Container Shipping - Coronavirus and Initial Thoughts

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>A double-dose of StubWorld this week: </p>
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<p>Port operators, including <a href="https://www.smartkarma.com/entities/china-merchants-port-holdings-company-ltd" target="_blank" data-smartkarma-citation="entities:15155:1" rel="noopener">China Merchants Port (144 HK) ("CMPH")</a>, have rebounded from 2019 lows amidst a period of calm in Hong Kong and "phase one" of the US/China trade deal. A JV with <a href="https://www.smartkarma.com/entities/cma-cgm-sa" target="_blank" data-smartkarma-citation="entities:23994:1" rel="noopener">CMA CGM SA (144898Z FP)</a> provides further positive news for CMPH.</p>
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<p>Preceding my comments on CMPH <em>and </em><a href="https://www.smartkarma.com/entities/wheelock-co-ltd" target="_blank" data-smartkarma-citation="entities:52:1" rel="noopener">Wheelock (20 HK)</a> are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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A double-dose of StubWorld this week: 

Port operators, including China Merchants Port (144 HK) ("CMPH"), have rebounded from 2019 lows amidst a period of calm in Hong Kong and "phase one" of the US/China trade deal. A JV with CMA CGM SA (144898Z FP) provides further positive news for CMPH.


Preceding my comments on CMPH and Wheelock (20 HK) are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: The Rising Tide As China Merchants Port Recovers

Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

<p>The recent deal between CMA CGM and China Merchant Port Holding (CMPH) will be a win-win for both parties. While CMA CGM  gets the necessary cash to lower its leverage, CMPH gains geographical footprint well aligned with China’s maritime silk route initiative. However, the deal has an accounting complication, which an analyst should consider while forecasting CMA CGM's debt obligation.</p>

The recent deal between CMA CGM and China Merchant Port Holding (CMPH) will be a win-win for both parties. While CMA CGM  gets the necessary cash to lower its leverage, CMPH gains geographical footprint well aligned with China’s maritime silk route initiative. However, the deal has an accounting complication, which an analyst should consider while forecasting CMA CGM's debt obligation.

CMA CGM’s Latest Deal with CMPH (SEHK:0144) : A Win-Win for Everyone

Global Credit Insights

Sebastian Ashton, CFA

SAA Advisors

<p>With their 2Q 2019 results expected to be released on Friday 6th September 2019, after market close, we thought it timely to highlight a framework to assess CMA CGM’s management’s ability in executing on their strategic transformation program.</p><p>CMA CGM, global shipping, and logistics company are in the process of integrating its acquisition of CEVA, an asset-light logistics company, into its business. As part of this process, CMA CGM has changed its strategic direction with a goal to now being a global leader in the transport and logistics sector.</p><p>Key to the successful integration of the two businesses and the longer-term success of the firm will be their ability to grow and optimize/realize scale efficiencies as a combined entity enabling them to increase profitability and maintain a market leadership position.</p><p>Key to being able to successfully monitor their implementation of the strategy will be identifying key KPI’s, both quantitative and qualitative, that the analyst can use to track progress. In this note, we suggest a set of financial KPI’s as well as a couple of key qualitative/subjective measures.</p><p>We see a good reason for long-term optimism, primarily as a result of consolidation, leading to cost optimization, and digitization efforts, both identified as KPI’s within this note.</p>

With their 2Q 2019 results expected to be released on Friday 6th September 2019, after market close, we thought it timely to highlight a framework to assess CMA CGM’s management’s ability in executing on their strategic transformation program.CMA CGM, global shipping, and logistics company are in the process of integrating its acquisition of CEVA, an asset-light logistics company, into its business. As part of this process, CMA CGM has changed its strategic direction with a goal to now being a global leader in the transport and logistics sector.Key to the successful integration of the two businesses and the longer-term success of the firm will be their ability to grow and optimize/realize scale efficiencies as a combined entity enabling them to increase profitability and maintain a market leadership position.Key to being able to successfully monitor their implementation of the strategy will be identifying key KPI’s, both quantitative and qualitative, that the analyst can use to track progress. In this note, we suggest a set of financial KPI’s as well as a couple of key qualitative/subjective measures.We see a good reason for long-term optimism, primarily as a result of consolidation, leading to cost optimization, and digitization efforts, both identified as KPI’s within this note.

France

CMA CGM provides shipping services. The Company offers vessel and container fleet management, freight delivery, logistics, cargo cruises, and other transportation services. CMA CGM serves customers worldwide.

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CMA CGM SA (144898Z FP)

European High Yield Outlook 2020 - Lucror Analytics

As in 2018, Brexit and US-China trade relations took centre stage in 2019. With a phase-one trade deal between the US and China reached and an...

Lucror Analytics

Container Shipping - Coronavirus and Initial Thoughts

Most of the shipping stocks fell in the third week of January after the breakout of the corona virus caused multiple casualties in China....

Drewry Maritime Financial Research

StubWorld: The Rising Tide As China Merchants Port Recovers

A double-dose of StubWorld this week: Port operators, including China Merchants Port (144 HK) ("CMPH"), have rebounded from 2019 lows amidst a...

David Blennerhassett

CMA CGM’s Latest Deal with CMPH (SEHK:0144) : A Win-Win for Everyone

The recent deal between CMA CGM and China Merchant Port Holding (CMPH) will be a win-win for both parties. While CMA CGM gets the necessary cash...

Drewry Maritime Financial Research

CMA CGM – Understanding the Strategy

With their 2Q 2019 results expected to be released on Friday 6th September 2019, after market close, we thought it timely to highlight a framework...

Sebastian Ashton, CFA

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