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

Longfor Group's FY 2022 results were satisfactory in our view. Despite a 31% y-o-y decline in contracted sales and ongoing margin pressure, total revenue grew 12%, with a 25% spike in recurring revenue. EBITDA climbed 9.3% to CNY 47.6 bn. While adjusted gross debt rose to CNY 223 bn (due to increased bank and other borrowings), short-term debt remained relatively low at CNY 22 bn, accounting for only 10% of total debt. This was thanks to the company’s strategy of optimising its debt structure by controlling ST and offshore debt. The liquidity buffer remains adequate, with restricted cash covering over 3x of short-term debt. Longfor successfully raised c. CNY 10 bn of funds in 2022 amid a market downturn, signalling low refinancing risk. We believe that Longfor has sound fundamentals, and we are confident about the company's ability to continue outperforming the industry. We project that future growth will be driven by good-quality land banks and diversified business segments.

  Longfor Group's FY 2022 results were satisfactory in our view. Despite a 31% y-o-y decline in contracted sales and ongoing margin pressure, total revenue grew 12%, with a 25% spike in recurring revenue. EBITDA climbed 9.3% to CNY 47.6 bn. While adjusted gross debt rose to CNY 223 bn (due to increased bank and other borrowings), short-term debt remained relatively low at CNY 22 bn, accounting for only 10% of total debt. This was thanks to the company’s strategy of optimising its debt structure by controlling ST and offshore debt.   The liquidity buffer remains adequate, with restricted cash covering over 3x of short-term debt. Longfor successfully raised c. CNY 10 bn of funds in 2022 amid a market downturn, signalling low refinancing risk. We believe that Longfor has sound fundamentals, and we are confident about the company's ability to continue outperforming the industry. We project that future growth will be driven by good-quality land banks and diversified business segments. 

Longfor Group - Earnings Flash - FY 2022 Results - Lucror Analytics

Asia biased macro & technical analysis, Untying The Gordian Knot

Untying The Gordian Knot

Asia biased macro & technical analysis

A differentiated process with a primary focus on Asia. Technical Analysis as core and Macro drivers that could bring the view to fruition & changes that could make the idea fall apart. The objective is to be the best in class, hence corner shop.

Technical Analysis

Country Garden Holdings Co / Technical Analysis

<ul><li>As a background, can I refer the reader to Substack Note No One Cares 有中国特色 Real Estate Liquidity Spiral to Solvency Challenge 31st October 2022 ?</li><li>It bottoms ticked recovery in the highly leveraged Real estate Index Hang Seng Mainland Property Index (HSPMI) and rallied 103% from trough to peak 27th January 2023.</li><li>The mainland listed Index CSI 300 Real estate (CSI300RE) trough (1st November) to peak (27th November) was 43.5%.</li></ul>

As a background, can I refer the reader to Substack Note No One Cares 有中国特色 Real Estate Liquidity Spiral to Solvency Challenge 31st October 2022 ?It bottoms ticked recovery in the highly leveraged Real estate Index Hang Seng Mainland Property Index (HSPMI) and rallied 103% from trough to peak 27th January 2023.The mainland listed Index CSI 300 Real estate (CSI300RE) trough (1st November) to peak (27th November) was 43.5%.

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>News reports indicate that <a href="https://www.smartkarma.com/entities/china-vanke-co-ltd-h" target="_blank" data-smartkarma-citation="entities:18368:1" rel="noopener">China Vanke (H) (2202 HK)</a> is looking to place 300m shares at a price range of HK$12.93-13.20/share to raise around US$500m.</li>
<li>The 300m shares is nearly 33 days of ADV, but around 11-12% of the new shares will be bought by passive trackers early next week and provide near-term support.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-vanke-co-ltd-h" target="_blank" data-smartkarma-citation="entities:18368:1" rel="noopener">China Vanke (H) (2202 HK)</a> trades cheaper than its peers on EV/Sales, EV/EBITDA and forward PE. Shorts have ticked higher in the last couple of weeks.</li>
</ul>


News reports indicate that China Vanke (H) (2202 HK) is looking to place 300m shares at a price range of HK$12.93-13.20/share to raise around US$500m.
The 300m shares is nearly 33 days of ADV, but around 11-12% of the new shares will be bought by passive trackers early next week and provide near-term support.

China Vanke (H) (2202 HK) trades cheaper than its peers on EV/Sales, EV/EBITDA and forward PE. Shorts have ticked higher in the last couple of weeks.


China Vanke (2202 HK): Placement & Index Flows

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>China Vanke aims to raise around US$500m in its H-share primary placement.</li>
<li>Vanke had recently stated that it aimed to raise around US$2bn via an A-share private placement, so a placement was expected for sure.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>


China Vanke aims to raise around US$500m in its H-share primary placement.
Vanke had recently stated that it aimed to raise around US$2bn via an A-share private placement, so a placement was expected for sure.
In this note, we will talk about the placement and run the deal through our ECM framework.


China Vanke Placement - A Placement Was Expected, Unclear if It Was This One

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Longfor's ESG as "Adequate", in line with its "Adequate" Environmental, Social and Governance scores. Controversies are "Immaterial" and Disclosure is "Adequate".

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).  We assess Longfor's ESG as "Adequate", in line with its "Adequate" Environmental, Social and Governance scores. Controversies are "Immaterial" and Disclosure is "Adequate".  

Longfor Group - ESG Report - Lucror Analytics

China

Longfor Properties Co. Ltd. operates in the property development, property investment and property management businesses in China.

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Longfor Properties (960 HK)

Longfor Group - Earnings Flash - FY 2022 Results - Lucror Analytics

Longfor Group's FY 2022 results were satisfactory in our view. Despite a 31% y-o-y decline in contracted sales and ongoing margin pressure, total...

Lucror Analytics

China Real Estate

It bottoms ticked recovery in the highly leveraged Real estate Index Hang Seng Mainland Property Index (HSPMI) and rallied 103% from trough to peak...

Untying The Gordian Knot

China Vanke (2202 HK): Placement & Index Flows

China Vanke is looking to sell 300m shares in a placement to raise US$500m. Passive index trackers will buy between 11-12% of the new shares early...

Brian Freitas

China Vanke Placement - A Placement Was Expected, Unclear if It Was This One

China Vanke aims to raise around US$500m in its H-share primary placement. In this note, we will talk about the placement and run the deal through...

Sumeet Singh

Longfor Group - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Longfor's ESG as...

Lucror Analytics

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