Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Indofood Sukses Makmur Tbk P / Event-Driven

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<p>A double-dose of StubWorld this week ...</p>
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<p><a href="https://www.smartkarma.com/entities/indofood-sukses-makmur-tbk-p" target="_blank" data-smartkarma-citation="entities:1053:1" rel="noopener">Indofood Sukses Makmur Tbk P (INDF IJ)</a>'s NAV widens as 80.5%-held <a href="https://www.smartkarma.com/entities/indofood-cbp-sukses-makmur-t" target="_blank" data-smartkarma-citation="entities:17651:1" rel="noopener">Indofood CBP Sukses (ICBP IJ)</a> recently outperforms, yet INDF still remains a cheap(er) proxy into ICBP. </p>
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<p>Preceding my comments on Indofood 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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<p>As always, more below the fold.</p>
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A double-dose of StubWorld this week ...



Indofood Sukses Makmur Tbk P (INDF IJ)'s NAV widens as 80.5%-held Indofood CBP Sukses (ICBP IJ) recently outperforms, yet INDF still remains a cheap(er) proxy into ICBP. 



Preceding my comments on Indofood 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%.


As always, more below the fold.


Last Week In Event SPACE: Didi Chuxing, Sydney Airport, Weibo, Container Shipping, Macau Gaming

Melco International Development / Event-Driven

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<p>This week in StubWorld ...</p>
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<p><a href="https://www.smartkarma.com/entities/melco-international-development-ltd" target="_blank" data-smartkarma-citation="entities:809:1" rel="noopener">Melco International Development (200 HK)</a>'s has bounced off its all-time low NAV discount and implied stub back in March, and is now back to +2 STD levels. </p>
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<p>Preceding my comments on Melco 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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<p>As always, more below the fold.</p>
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This week in StubWorld ...




Melco International Development (200 HK)'s has bounced off its all-time low NAV discount and implied stub back in March, and is now back to +2 STD levels. 




Preceding my comments on Melco 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%.


As always, more below the fold.


StubWorld: Lock In Profits As Melco's NAV Discount Narrows

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>We initiate coverage of Sands China, with a "Hold" recommendation on the SANLTD Notes. </p>
<p>We view Sands China as “Low Risk” on the LARA scale. Parent Las Vegas Sands Corp​ (LVSC) is a pioneer of the integrated resorts business model, which combines casino gaming with ancillary facilities such as MICE and entertainment. Among the six concession/sub-concession holders in Macau, Sands China has the largest scale and the highest market share in the territory's fast-growing mass-market gaming segment. Our view also considers the company's track record of strong operations and sound financial management, with a robust leverage profile prior to the COVID-19 pandemic. </p>
<p>Our fundamental Credit Bias on Sands China is “Negative”, as the company is still incurring an operating cash burn due to the pandemic. We expect the company’s OCF to turn positive towards FYE 2021, assuming the Macau/Mainland travel visa requirements continue to ease. That said, its FCF should remain negative in FY 2021, owing to planned capex for The Londoner Macao. Hence, we foresee that the company's debt will increase further throughout the year. </p>
<p>We view Sands China's corporate governance as “Effective” on the LAGA scale. We believe the company is now run by professional managers, following the death of founder Sheldon Adelson. This is despite the 57% stake that his wife, Miriam Adelson, and family hold in LVSC. Related party transactions are immaterial. That said, the absence of an independent chairman is a minor negative.</p>

We initiate coverage of Sands China, with a "Hold" recommendation on the SANLTD Notes. 
We view Sands China as “Low Risk” on the LARA scale. Parent Las Vegas Sands Corp​ (LVSC) is a pioneer of the integrated resorts business model, which combines casino gaming with ancillary facilities such as MICE and entertainment. Among the six concession/sub-concession holders in Macau, Sands China has the largest scale and the highest market share in the territory's fast-growing mass-market gaming segment. Our view also considers the company's track record of strong operations and sound financial management, with a robust leverage profile prior to the COVID-19 pandemic. 
Our fundamental Credit Bias on Sands China is “Negative”, as the company is still incurring an operating cash burn due to the pandemic. We expect the company’s OCF to turn positive towards FYE 2021, assuming the Macau/Mainland travel visa requirements continue to ease. That said, its FCF should remain negative in FY 2021, owing to planned capex for The Londoner Macao. Hence, we foresee that the company's debt will increase further throughout the year. 
We view Sands China's corporate governance as “Effective” on the LAGA scale. We believe the company is now run by professional managers, following the death of founder Sheldon Adelson. This is despite the 57% stake that his wife, Miriam Adelson, and family hold in LVSC. Related party transactions are immaterial. That said, the absence of an independent chairman is a minor negative.

Sands China - Tear Sheet - Lucror Analytics

<p>One step forward ...</p>
<p>The travel bubble - or perhaps travel corridor has a nicer ring to it - between Hong Kong and China remains very much a work in progress. </p>
<p>There were earlier reports that cross-border travel between the two SARs would resume on July 11, under certain conditions.</p>
<p>Yet Hong Kong's tourism sector lawmaker Yiu Si-wing said cross-border travel between Hong Kong and Macau is unlikely to resume next week as the two administrations have yet to put forward any concrete plans regarding the travel arrangement.</p>
<p>As it stands,  the Macau government raised the threshold for resumption of travel, with Hong Kong required to reach 14 days without either local coronavirus infections or community ones linked to imported cases. Previously, the requirement was for no untraceable cases for 28 days.</p>
<p>The Macau Tourism <a href="https://www.macaotourism.gov.mo/en/" target="_blank" rel="noopener">website</a> mentions if departing from Hong Kong, you need a clear Covid test within the last 24 hours, and you will still need to go to designated places for a 14-day medical observation. Visitors from China face similar restrictions - although the Covid test must be within a 7-day window.</p>
<p>This brings us to the Macau gaming sector.</p>
<p>Despite meaningfully reduced visitation (~16% of 2019 levels in the 1Q21), positive EBITDA in Macau is occurring. 1Q21 mass gaming has recovered to approximately 38% of 1Q19 levels.</p>
<p>In this insight, I look at how <a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China Ltd (1928 HK)</a> has weathered the pandemic and how it is placed for a recovery.</p>

One step forward ...
The travel bubble - or perhaps travel corridor has a nicer ring to it - between Hong Kong and China remains very much a work in progress. 
There were earlier reports that cross-border travel between the two SARs would resume on July 11, under certain conditions.
Yet Hong Kong's tourism sector lawmaker Yiu Si-wing said cross-border travel between Hong Kong and Macau is unlikely to resume next week as the two administrations have yet to put forward any concrete plans regarding the travel arrangement.
As it stands,  the Macau government raised the threshold for resumption of travel, with Hong Kong required to reach 14 days without either local coronavirus infections or community ones linked to imported cases. Previously, the requirement was for no untraceable cases for 28 days.
The Macau Tourism website mentions if departing from Hong Kong, you need a clear Covid test within the last 24 hours, and you will still need to go to designated places for a 14-day medical observation. Visitors from China face similar restrictions - although the Covid test must be within a 7-day window.
This brings us to the Macau gaming sector.
Despite meaningfully reduced visitation (~16% of 2019 levels in the 1Q21), positive EBITDA in Macau is occurring. 1Q21 mass gaming has recovered to approximately 38% of 1Q19 levels.
In this insight, I look at how Sands China Ltd (1928 HK) has weathered the pandemic and how it is placed for a recovery.

Sands China (1928 HK): Gambling On The Future

Hong Kong

Sands China Ltd. develops, owns, and operates integrated resorts, retail malls, and casinos. The Company also manages convention and exhibition halls in Macau.

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Sands China (1928 HK)

StubWorld: Momentum With Indofood CBP

A 40% discount to NAV is wide for what is largely a single stock Holdco. Should ICBP continue to outperform here, I'd recommend a long/short on a...

David Blennerhassett

Last Week In Event SPACE: Didi Chuxing, Sydney Airport, Weibo, Container Shipping, Macau Gaming

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: Lock In Profits As Melco's NAV Discount Narrows

If you had set-up Melco - Long Melco and Short MLCO - I'd unwind that trade. I'd be inclined to reverse the stub here - Short Melco and Long MLCO.

David Blennerhassett

Sands China - Tear Sheet - Lucror Analytics

We initiate coverage of Sands China, with a "Hold" recommendation on the SANLTD Notes. We view Sands China as “Low Risk” on the LARA scale....

Lucror Analytics

Sands China (1928 HK): Gambling On The Future

Sands China is trading relatively in line with Macau peers, but on a longer-term viewpoint, is slightly below the premium it has traded at compared...

David Blennerhassett

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