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

Medco Energi's tender offers are positive for existing bondholders in our view, as the early tender considerations are 2-3 pts above the last traded prices before the announcement. Conversely, we doubt the repurchases will provide significant interest savings for the company. Still, we view the proposed new notes issuance as credit positive for Medco, as it will lengthen the debt maturity profile and enable the company to finance a Middle East acquisition using long-term funding. We recommend that holders of the MEDCIJ 6.75 25 tender before the early tender deadline, but are neutral on the tender offer for the remaining notes. We see fair value for the proposed 2029 notes at 9.2-9.7%.

  Medco Energi's tender offers are positive for existing bondholders in our view, as the early tender considerations are 2-3 pts above the last traded prices before the announcement. Conversely, we doubt the repurchases will provide significant interest savings for the company. Still, we view the proposed new notes issuance as credit positive for Medco, as it will lengthen the debt maturity profile and enable the company to finance a Middle East acquisition using long-term funding.   We recommend that holders of the MEDCIJ 6.75 25 tender before the early tender deadline, but are neutral on the tender offer for the remaining notes. We see fair value for the proposed 2029 notes at 9.2-9.7%.  

Medco Energi - Event Flash - Tender Offer And Potential Notes Issuance - Lucror Analytics

Medco Energi's H1/23 results were acceptable in our view. The company's earnings were soft, weighed down by lower O&G selling prices despite higher production volumes. That said, we expect Medco's earnings to rebound in H2, considering the recent rally in oil prices. Positively, the company's leverage and liquidity profile remain strong. We believe Medco will be able to accommodate its USD 400-800 mn acquisition in the Middle East without breaching the 2.5x net leverage target. In addition, we note positively Amman Mineral Nusa Tenggara's (AMMN) successful IPO in July 2023. We note that Medco's 21% stake in AMMN is worth USD 6.1 bn (based on AMMN's current market cap of c. USD 29 bn), which is far larger than Medco's own market cap of USD 2.2 bn.

  Medco Energi's H1/23 results were acceptable in our view. The company's earnings were soft, weighed down by lower O&G selling prices despite higher production volumes. That said, we expect Medco's earnings to rebound in H2, considering the recent rally in oil prices. Positively, the company's leverage and liquidity profile remain strong. We believe Medco will be able to accommodate its USD 400-800 mn acquisition in the Middle East without breaching the 2.5x net leverage target.   In addition, we note positively Amman Mineral Nusa Tenggara's (AMMN) successful IPO in July 2023. We note that Medco's 21% stake in AMMN is worth USD 6.1 bn (based on AMMN's current market cap of c. USD 29 bn), which is far larger than Medco's own market cap of USD 2.2 bn. 

Medco Energi - Earnings Flash - H1 FY 2023 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.<ul><li><a href='#lucror-entity-35408'>JSW Infrastructure</a></li><li><a href='#lucror-entity-20844'>Medco Energi</a></li></ul>

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.JSW InfrastructureMedco Energi

Morning Views Asia: JSW Infrastructure, Medco Energi

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<ul>
<li>The review period for the LQ45 Index ended on 31 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.</li>
<li>We see <a href="https://www.smartkarma.com/entities/waskita-karya-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:15739:1" rel="noopener">Waskita Karya (Persero) (WSKT IJ)</a>, <a href="https://www.smartkarma.com/entities/bfi-finance-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8447:1" rel="noopener">BFI Finance Indonesia (BFIN IJ)</a> and <a href="https://www.smartkarma.com/entities/harum-energy-tbk-pt" target="_blank" data-smartkarma-citation="entities:1604:1" rel="noopener">Harum Energy (HRUM IJ)</a> as higher probability inclusions in the LQ45 Index.</li>
<li>Given the focus is on liquidity, we see <a href="https://www.smartkarma.com/entities/jasa-marga-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:12747:1" rel="noopener">Jasa Marga (Persero) (JSMR IJ)</a>, <a href="https://www.smartkarma.com/entities/bumi-serpong-damai-pt" target="_blank" data-smartkarma-citation="entities:15498:1" rel="noopener">Bumi Serpong Damai (BSDE IJ)</a> and <a href="https://www.smartkarma.com/entities/akr-corporindo-tbk-pt" target="_blank" data-smartkarma-citation="entities:13338:1" rel="noopener">AKR Corporindo (AKRA IJ)</a> as higher probability deletion candidates.</li>
</ul>


The review period for the LQ45 Index ended on 31 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
We see Waskita Karya (Persero) (WSKT IJ), BFI Finance Indonesia (BFIN IJ) and Harum Energy (HRUM IJ) as higher probability inclusions in the LQ45 Index.
Given the focus is on liquidity, we see Jasa Marga (Persero) (JSMR IJ), Bumi Serpong Damai (BSDE IJ) and AKR Corporindo (AKRA IJ) as higher probability deletion candidates.


LQ45 Index Rebalance Preview (Feb 2022): Potential Changes Later This Month

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Debt Capital Markets

Asia High Yield Bond Index / Debt Capital Markets

<ul>
<li>As we are entering the second half of 2024, inflation has remained sticky as expected.</li>
<li>The lingering fear of a global recession has been mitigating rising shipping and production costs and, as a result, kept inflation in check.</li>
<li>We see more opportunities in selected Chinese bonds in industries away from property and local government financing vehicle (LGFV) sectors and believe non-Asia emerging bonds offer better value.</li>
</ul>


As we are entering the second half of 2024, inflation has remained sticky as expected.
The lingering fear of a global recession has been mitigating rising shipping and production costs and, as a result, kept inflation in check.
We see more opportunities in selected Chinese bonds in industries away from property and local government financing vehicle (LGFV) sectors and believe non-Asia emerging bonds offer better value.


Indonesia

PT Medco Energi Internasional Tbk is an integrated energy company. The Company explores for and produces oil and gas both in Indonesia and internationally, operates gas-fired power plants in Panaran I, Batam Island, and develops renewable fuels such as Bio-fuel.

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Medco Energi (MEDC IJ)

Medco Energi - Event Flash - Tender Offer And Potential Notes Issuance - Lucror Analytics

Medco Energi's tender offers are positive for existing bondholders in our view, as the early tender considerations are 2-3 pts above the last...

Lucror Analytics

Medco Energi - Earnings Flash - H1 FY 2023 Results - Lucror Analytics

Medco Energi's H1/23 results were acceptable in our view. The company's earnings were soft, weighed down by lower O&G selling prices despite...

Lucror Analytics

Morning Views Asia: JSW Infrastructure, Medco Energi

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

Lucror Analytics

LQ45 Index Rebalance Preview (Feb 2022): Potential Changes Later This Month

Changes to the LQ45 Index will be announced soon & become effective after the close on 31 Jan. We see three potential changes. The adds outperform...

Brian Freitas

Bond Market Monitor: No Rate Hikes

Inflation remains stable in 2024 due to fears of global recession and opportunities seen in Chinese bonds outside of property and LGFV sectors.

Bondcritic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Medco Energi - Event Flash - Tender Offer And Potential Notes Issuance - Lucror Analytics

Medco Energi's tender offers are positive for existing bondholders in our view, as the early tender considerations are 2-3 pts above the last...

Lucror Analytics

Medco Energi - Earnings Flash - H1 FY 2023 Results - Lucror Analytics

Medco Energi's H1/23 results were acceptable in our view. The company's earnings were soft, weighed down by lower O&G selling prices despite...

Lucror Analytics

Morning Views Asia: JSW Infrastructure, Medco Energi

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

Lucror Analytics

LQ45 Index Rebalance Preview (Feb 2022): Potential Changes Later This Month

Changes to the LQ45 Index will be announced soon & become effective after the close on 31 Jan. We see three potential changes. The adds outperform...

Brian Freitas

Bond Market Monitor: No Rate Hikes

​Inflation remains stable in 2024 due to fears of global recession and opportunities seen in Chinese bonds outside of property and LGFV sectors.

Bondcritic

Inflation remains stable in 2024 due to fears of global recession and opportunities seen in Chinese bonds outside of property and LGFV sectors.