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

In this month’s “In-Focus” section, we provide an update on the Chinese property sector, including operational trends and regulatory developments, as well as an overview of the FY 2020 results of most developers under our full coverage. The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.

  In this month’s “In-Focus” section, we provide an update on the Chinese property sector, including operational trends and regulatory developments, as well as an overview of the FY 2020 results of most developers under our full coverage.   The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. 

Asia HY Monthly - Chinese Property Update (2021) - Lucror Analytics

We view Olam as "High Risk" on the LARA scale. This takes into account the risks associated with the: [1] low margins that characterise the commodities supply-chain industry; [2] high working-capital needs for its trading operations; [3] weak leverage; and [4] dependence on banks to extend credit for refinancing. These are balanced by the company's long operating history and diversified business profile in the agricultural commodity industry. Although Olam has strong shareholders (e.g. Temasek Holdings and Mitsubishi Corporation), support is not guaranteed. In our view, the absence of a Change of Control clause under the indenture poses a material risk for bondholders. Our fundamental Credit Bias is "Stable". Olam has emerged relatively unscathed from the COVID-19 crisis, and earnings improved in FY 2020. Negatively, the volatile and erratic working capital movements result in unpredictable FCF generation, which weighs on the credit profile.

  We view Olam as "High Risk" on the LARA scale. This takes into account the risks associated with the: [1] low margins that characterise the commodities supply-chain industry; [2] high working-capital needs for its trading operations; [3] weak leverage; and [4] dependence on banks to extend credit for refinancing. These are balanced by the company's long operating history and diversified business profile in the agricultural commodity industry. Although Olam has strong shareholders (e.g. Temasek Holdings and Mitsubishi Corporation), support is not guaranteed. In our view, the absence of a Change of Control clause under the indenture poses a material risk for bondholders.   Our fundamental Credit Bias is "Stable". Olam has emerged relatively unscathed from the COVID-19 crisis, and earnings improved in FY 2020. Negatively, the volatile and erratic working capital movements result in unpredictable FCF generation, which weighs on the credit profile. 

In this month's “In-Focus”, we update our study of agency ratings for Asian issuers, analysing ratings transitions for all issuers in the Lucror Asia HY index between January 2014 and the present. The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.

  In this month's “In-Focus”, we update our study of agency ratings for Asian issuers, analysing ratings transitions for all issuers in the Lucror Asia HY index between January 2014 and the present.   The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market.  

Asia HY Monthly - Asian HY Ratings Transition Study - Lucror Analytics

Olam’s H2/20 results were acceptable, given the improved top line and EBIT. Negatively, the company’s working capital outflows were surprisingly large, resulting in significantly negative FCF generation and weaker leverage. We believe the erratic working capital movements reflect the inherent volatility of Olam’s commodity trading businesses. Separately, the business re-segmentation has been completed, which we believe has led to improved disclosure. At present, management has yet to provide guidance on the capital structure of each business unit post-IPO. We believe such information will be critical in helping bondholders understand the subordination risk of their investments.

  Olam’s H2/20 results were acceptable, given the improved top line and EBIT. Negatively, the company’s working capital outflows were surprisingly large, resulting in significantly negative FCF generation and weaker leverage. We believe the erratic working capital movements reflect the inherent volatility of Olam’s commodity trading businesses.   Separately, the business re-segmentation has been completed, which we believe has led to improved disclosure. At present, management has yet to provide guidance on the capital structure of each business unit post-IPO. We believe such information will be critical in helping bondholders understand the subordination risk of their investments. 

Olam - Earnings Flash - FY 2020 Results - Lucror Analytics

The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

  The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Book - February 2021 - Lucror Analytics

Singapore

Olam Group Ltd operates as a food and agri-business company. The Company supplies food ingredients, feed, fibre, and edible oil. Olam Group serves customers worldwide.

Through our purpose to ‘Re-imagine Global Agriculture and Food Systems’, Olam aims to address the many challenges involved in meeting the needs of a growing global population, while achieving positive impact for farming communities, our planet and all our stakeholders. 

Headquartered and listed in Singapore, Olam currently ranks among the top 30 largest primary listed companies in terms of market capitalisation on SGX-ST.

More information on Olam can be found at www.olamgroup.com. 
	 	 
Olam is located at 7 Straits View, Marina One East Tower #20-01, Singapore 018936. Telephone: +65 63394100, Facsimile: +65 63399755.

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Olam Group (OLG SP)

Asia HY Monthly - Chinese Property Update (2021) - Lucror Analytics

In this month’s “In-Focus” section, we provide an update on the Chinese property sector, including operational trends and regulatory...

Lucror Analytics

Olam - Tear Sheet - Lucror Analytics

We view Olam as "High Risk" on the LARA scale. This takes into account the risks associated with the: [1] low margins that characterise the...

Lucror Analytics

Asia HY Monthly - Asian HY Ratings Transition Study - Lucror Analytics

In this month's “In-Focus”, we update our study of agency ratings for Asian issuers, analysing ratings transitions for all issuers in the Lucror...

Lucror Analytics

Olam - Earnings Flash - FY 2020 Results - Lucror Analytics

Olam’s H2/20 results were acceptable, given the improved top line and EBIT. Negatively, the company’s working capital outflows were surprisingly...

Lucror Analytics

Asia HY Trade Book - February 2021 - Lucror Analytics

The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also...

Lucror Analytics

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