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

SJM Holdings' FY 2022 earnings were strong, albeit inconsequential in our view. The company reported smaller revenue and GGR declines compared to the industry, and delivered commendable market share growth (supported by a better showing at its self-promoted casinos). It is uncertain if SJM can retain the market share gains going forward, considering the slow ramp-up at Grand Lisboa Palace (GLP) as well as the company's closure of five satellite and two self-promoted casinos. SJM may also have to contend with higher employee costs, as it has a surplus of gaming staff (arising from the casino closures) but insufficient headcount to ramp up operations at GLP. We expect FCF to remain deeply negative in FY 2023, due to high capex and an uncertain earnings trajectory.

  SJM Holdings' FY 2022 earnings were strong, albeit inconsequential in our view. The company reported smaller revenue and GGR declines compared to the industry, and delivered commendable market share growth (supported by a better showing at its self-promoted casinos).   It is uncertain if SJM can retain the market share gains going forward, considering the slow ramp-up at Grand Lisboa Palace (GLP) as well as the company's closure of five satellite and two self-promoted casinos. SJM may also have to contend with higher employee costs, as it has a surplus of gaming staff (arising from the casino closures) but insufficient headcount to ramp up operations at GLP. We expect FCF to remain deeply negative in FY 2023, due to high capex and an uncertain earnings trajectory. 

SJM Holdings - Earnings Flash - FY 2022 Results - Lucror Analytics

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Star Entertainment Group / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/star-entertainment-group-ltd" target="_blank" data-smartkarma-citation="entities:926:1" rel="noopener">Star Entertainment Group (SGR AU)</a> will raise A$800 million with a fully underwritten 3:5 pro rata accelerated non-renounceable entitlement offer and institutional placement at A$1.20, a 13.6% discount to TERP.</li>
<li>The equity raise of A$800 million will maintain leverage within the targeted 2.0x-2.5x net debt/EBITDA long-term range in our fines high-case scenario.</li>
<li>Adjusting for the raise, Star trades at a discount to peers. While the shares will be under short-term pressure due to the raise, there is long-term value for the brave. </li>
</ul>



Star Entertainment Group (SGR AU) will raise A$800 million with a fully underwritten 3:5 pro rata accelerated non-renounceable entitlement offer and institutional placement at A$1.20, a 13.6% discount to TERP.
The equity raise of A$800 million will maintain leverage within the targeted 2.0x-2.5x net debt/EBITDA long-term range in our fines high-case scenario.
Adjusting for the raise, Star trades at a discount to peers. While the shares will be under short-term pressure due to the raise, there is long-term value for the brave. 


Star Entertainment (SGR AU): A$800m Highly Dilutive Raise to Fix the Balance Sheet

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/star-entertainment-group-ltd" target="_blank" data-smartkarma-citation="entities:926:1" rel="noopener">Star Entertainment Group (SGR AU)</a> scored an own goal by failing to provide an update on the balance sheet in the update on 13 February. The results are next week.   </li>
<li>There is a whirlwind of uncertainty surrounding potential fines and Star is in desperate need to recapitalise its balance sheet to avoid breaching covenants. </li>
<li>Our leverage scenarios suggest an equity raise of A$250-500 million is required. Despite the share price fall, we would steer clear until the details of its equity raise are disclosed.</li>
</ul>



Star Entertainment Group (SGR AU) scored an own goal by failing to provide an update on the balance sheet in the update on 13 February. The results are next week.   
There is a whirlwind of uncertainty surrounding potential fines and Star is in desperate need to recapitalise its balance sheet to avoid breaching covenants. 
Our leverage scenarios suggest an equity raise of A$250-500 million is required. Despite the share price fall, we would steer clear until the details of its equity raise are disclosed.


Star Entertainment (SGR AU): Entertaining Known Unknowns

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Stay away from <a href="https://www.smartkarma.com/entities/adani-enterprises-ltd" target="_blank" data-smartkarma-citation="entities:245:1" rel="noopener">Adani Enterprises (ADE IN)</a>. It has wrapped itself in a cloak of nationalistic righteous indignation. Do not buy the dip. Or even a larger one. </li>
<li>The timing of a <a href="https://www.smartkarma.com/entities/bendigo-adelaide-bank-ltd" target="_blank" data-smartkarma-citation="entities:682:1" rel="noopener">Bendigo And Adelaide Bank (BEN AU)</a> and <a href="https://www.smartkarma.com/entities/bank-of-queensland-ltd" target="_blank" data-smartkarma-citation="entities:16606:1" rel="noopener">Bank Of Queensland (BOQ AU)</a> merger makes a lot of sense right now.</li>
<li>This <a href="https://www.smartkarma.com/entities/renault-sa" target="_blank" data-smartkarma-citation="entities:21536:1" rel="noopener">Renault SA (RNO FP)</a> / <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:72:1" rel="noopener">Nissan Motor (7201 JP)</a>'s press release and "agreement", as-is, is a Nothingburger. </li>
</ul>


Stay away from Adani Enterprises (ADE IN). It has wrapped itself in a cloak of nationalistic righteous indignation. Do not buy the dip. Or even a larger one. 
The timing of a Bendigo And Adelaide Bank (BEN AU) and Bank Of Queensland (BOQ AU) merger makes a lot of sense right now.
This Renault SA (RNO FP) / Nissan Motor (7201 JP)'s press release and "agreement", as-is, is a Nothingburger. 


Last Week in SPACE: Adani Group, Bendigo/Bank of Queensland, Renault/Nissan, Keisei/Oriental Land

<ul>
<li>Be long <a href="https://www.smartkarma.com/entities/kawasaki-kisen-kaisha-ltd" target="_blank" data-smartkarma-citation="entities:3548:1" rel="noopener">Kawasaki Kisen Kaisha (9107 JP)</a> vs MOL and NYK. The shares are cheap on a forward basis. KLine is reducing the Real World Float, causing further potential squeeze.</li>
<li>
<a href="https://www.smartkarma.com/entities/sabana-industrial-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:911:1" rel="noopener">Sabana Industrial REIT (SSREIT SP)</a>'s Partial Offer at 0.88x book is not overwhelming, but it is also not a control stake. It is probably priced near-right.</li>
<li>IF <a href="https://www.smartkarma.com/entities/osstem-implant-co-ltd" target="_blank" data-smartkarma-citation="entities:1450:1" rel="noopener">Osstem (048260 KS)</a>'s price were to go higher, it is conceivable there could be a bump, but don't bet on it as long as the stock trades &lt;KRW 190,000. </li>
</ul>


Be long Kawasaki Kisen Kaisha (9107 JP) vs MOL and NYK. The shares are cheap on a forward basis. KLine is reducing the Real World Float, causing further potential squeeze.

Sabana Industrial REIT (SSREIT SP)'s Partial Offer at 0.88x book is not overwhelming, but it is also not a control stake. It is probably priced near-right.
IF Osstem (048260 KS)'s price were to go higher, it is conceivable there could be a bump, but don't bet on it as long as the stock trades &lt;KRW 190,000. 


Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises

Hong Kong

SJM Holdings Limited offers amusement and recreation services.  The Company operates casinos, hotels, and other tourism-related facilities in Macau.

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SJM Holdings (880 HK)

SJM Holdings - Earnings Flash - FY 2022 Results - Lucror Analytics

SJM Holdings' FY 2022 earnings were strong, albeit inconsequential in our view. The company reported smaller revenue and GGR declines compared to...

Lucror Analytics

Star Entertainment (SGR AU): A$800m Highly Dilutive Raise to Fix the Balance Sheet

Adjusting for the raise, Star trades at a discount to peers. While the shares will be under short-term pressure due to the raise, there is long...

Arun George

Star Entertainment (SGR AU): Entertaining Known Unknowns

Our leverage scenarios suggest an equity raise of A$250-500 million is required. Despite the share price fall, we would steer clear until the...

Arun George

Last Week in SPACE: Adani Group, Bendigo/Bank of Queensland, Renault/Nissan, Keisei/Oriental Land

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

Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises

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

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