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

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 - 15 Mar 2019

Lucror Analytics - Morning Views Asia - 14 Mar 2019

Singapore and emerging market real estate

Royston Foo

Equity Bottom-Up

Lippo Malls Indonesia Retail Trust / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/10946" target="_blank" data-smartkarma-citation="entities:10946:1">Lippo Malls Indonesia Retail Trust (LMRT SP)</a> (“LMIRT”) today announced the acquisition of Lippo Mall Puri from its sponsor PT Lippo Karawaci Tbk for a consideration of Rp.3,700.0 bil (S$354.7 mil).There is a significant amount of vendor support provided by Lippo Group to improve the net property income and NPI yield of Lippo Mall Puri. If we exclude the vendor support from the target NPI, the NPI yield excluding vendor support will just be 6.52% per annum.The transaction is DPU and yield dilutive. The resultant DPU post-transaction will decline from 2.05 S-cents to 1.61 S-cents / 1.42 S-cents. Distribution yield will also fall from 10.25% to 9.28% / 8.85% based on TERP.The transaction could also potentially result in LMIRT’s gearing increasing from 34.6% to 39.0% which will worsen its balance sheet strength and credit standings. In view of the unattractive acquisition and potential EFR dilution, investors should avoid LMIRT for now and wait for opportunity to enter with a greater margin of safety.

Lippo Malls Indonesia Retail Trust (LMRT SP) (“LMIRT”) today announced the acquisition of Lippo Mall Puri from its sponsor PT Lippo Karawaci Tbk for a consideration of Rp.3,700.0 bil (S$354.7 mil).There is a significant amount of vendor support provided by Lippo Group to improve the net property income and NPI yield of Lippo Mall Puri. If we exclude the vendor support from the target NPI, the NPI yield excluding vendor support will just be 6.52% per annum.The transaction is DPU and yield dilutive. The resultant DPU post-transaction will decline from 2.05 S-cents to 1.61 S-cents / 1.42 S-cents. Distribution yield will also fall from 10.25% to 9.28% / 8.85% based on TERP.The transaction could also potentially result in LMIRT’s gearing increasing from 34.6% to 39.0% which will worsen its balance sheet strength and credit standings. In view of the unattractive acquisition and potential EFR dilution, investors should avoid LMIRT for now and wait for opportunity to enter with a greater margin of safety. 

Lippo Malls REIT – Acquisition of Lippo Mall Puri Announced. Dilutive Rights Issue Coming.

Trung Nguyen

In our view, the rights issue is credit positive due to the proposed cash proceeds and the enlarged equity base. We believe the rights issue will be approved (as the Riady family owns the controlling stake) and will be a success (underwritten by the family). The IDR 10 tn cash proceeds would be enough to plug more than two years worth of cash outflows (operating cash outflows, excluding one-off transactions, amounted to IDR 3.0 tn in 2019 and IDR 4.5 tn in 2017). That said, it remains unclear how much debt will be repaid from the proceeds. This may reduce the risk of negative actions by rating agencies. We view the tender offers as opportunistic, rather than a distressed exchange, and do not recommend investors to tender.

   In our view, the rights issue is credit positive due to the proposed cash proceeds and the enlarged equity base. We believe the rights issue will be approved (as the Riady family owns the controlling stake) and will be a success (underwritten by the family). The IDR 10 tn cash proceeds would be enough to plug more than two years worth of cash outflows (operating cash outflows, excluding one-off transactions, amounted to IDR 3.0 tn in 2019 and IDR 4.5 tn in 2017). That said, it remains unclear how much debt will be repaid from the proceeds.    This may reduce the risk of negative actions by rating agencies.    We view the tender offers as opportunistic, rather than a distressed exchange, and do not recommend investors to tender. 

Lippo Karawaci - Event Flash - Announces Rights Issue And Notes Tender - Lucror Analytics

Lucror Analytics - Morning Views Asia - 07 Mar 2019

Indonesia

PT Lippo Karawaci Tbk is a diversified and integrated property group and is involved in townships, residential homes, hospitals, hotels, retail malls and industrial estate development and management.  PT Lippo Karawaci through its subsidiaries is also engaged in property and REIT management.

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Lippo Karawaci (LPKR IJ)

Lucror Analytics - Morning Views Asia - 15 Mar 2019

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

Lucror Analytics

Lucror Analytics - Morning Views Asia - 14 Mar 2019

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

Lucror Analytics

Lippo Malls REIT – Acquisition of Lippo Mall Puri Announced. Dilutive Rights Issue Coming.

Lippo Malls Indonesia Retail Trust (LMRT SP) (“LMIRT”) today announced the acquisition of Lippo Mall Puri from its sponsor PT Lippo Karawaci Tbk...

Royston Foo

Lippo Karawaci - Event Flash - Announces Rights Issue And Notes Tender - Lucror Analytics

In our view, the rights issue is credit positive due to the proposed cash proceeds and the enlarged equity base. We believe the rights issue will...

Lucror Analytics

Lucror Analytics - Morning Views Asia - 07 Mar 2019

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

Lucror Analytics

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