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 2020 results were in line with expectations, considering the overall industry softness. Going forward, we expect the company's debt growth to be contained, given the completion of construction works for Grand Lisboa Palace in Q4. Still, SJM is unlikely to achieve meaningful deleveraging (to around pre-COVID-19 levels) before FY 2022. The extent of deleveraging will also depend on when the company intends to resume dividends. While liquidity remains tight, we expect SJM to be able to refinance its secured loans. In other news, the Macau government has removed the few remaining Mainland cities on its quarantine list, with effect from 23 February 2021. This means that visitors from all Chinese cities are now exempt from serving a 14-day quarantine upon entering Macau. While this is a small step towards the normalisation of travel between Macau and Mainland China, it is unlikely to have an immediate impact on tourist arrival numbers. Separately, Macau has begun to roll out Sinopharm COVID-19 vaccines to eligible residents on a voluntary basis, with priority given to people in the healthcare and hospitality industries.

 SJM Holdings' FY 2020 results were in line with expectations, considering the overall industry softness. Going forward, we expect the company's debt growth to be contained, given the completion of construction works for Grand Lisboa Palace in Q4. Still, SJM is unlikely to achieve meaningful deleveraging (to around pre-COVID-19 levels) before FY 2022. The extent of deleveraging will also depend on when the company intends to resume dividends. While liquidity remains tight, we expect SJM to be able to refinance its secured loans.  In other news, the Macau government has removed the few remaining Mainland cities on its quarantine list, with effect from 23 February 2021. This means that visitors from all Chinese cities are now exempt from serving a 14-day quarantine upon entering Macau. While this is a small step towards the normalisation of travel between Macau and Mainland China, it is unlikely to have an immediate impact on tourist arrival numbers. Separately, Macau has begun to roll out Sinopharm COVID-19 vaccines to eligible residents on a voluntary basis, with priority given to people in the healthcare and hospitality industries.

SJM Holdings - Earnings Flash - FY 2020 Results - Lucror Analytics

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Thematic (Sector/Industry)

Current investment levels in Macau Gaming stocks are low compared to history across all of our ownership measures.  Declines that started in 2014 were accentuated by the COVID crisis, as EM funds repositioned in to safer corners of the market.  From a positioning perspective, this leaves plenty of upside should a change in sentiment occur.  Active EM exposure is now close to a 10-year low, there are many previous investors sitting on the sidelines and current investors are far from overstretched.At present though, EM investors bullish on the fundamental case for Macau Gaming stocks should be aware that this is largely an anti-consensus view.  74% of EM active funds do not have exposure and neither does the benchmark MSCI Emerging Markets index.  If it does pays off, it will provide valuable outperformance against both the benchmark and the active peer group in the year to come.  The analysis looks at the collective allocations in Macau Gaming stocks from a pool of 243 actively managed Global Emerging Market funds, with combined AUM of $460bn,

Current investment levels in Macau Gaming stocks are low compared to history across all of our ownership measures.  Declines that started in 2014 were accentuated by the COVID crisis, as EM funds repositioned in to safer corners of the market.  From a positioning perspective, this leaves plenty of upside should a change in sentiment occur.  Active EM exposure is now close to a 10-year low, there are many previous investors sitting on the sidelines and current investors are far from overstretched.At present though, EM investors bullish on the fundamental case for Macau Gaming stocks should be aware that this is largely an anti-consensus view.  74% of EM active funds do not have exposure and neither does the benchmark MSCI Emerging Markets index.  If it does pays off, it will provide valuable outperformance against both the benchmark and the active peer group in the year to come.  The analysis looks at the collective allocations in Macau Gaming stocks from a pool of 243 actively managed Global Emerging Market funds, with combined AUM of $460bn,

Macau Gaming:  Beaten up Sector Has Potential to Reverse

Global Gaming and Casinos Industry Specialist, Casino Business Review LLC

Howard J Klein

Global Gaming and Casinos Industry Specialist

Equity Bottom-Up

<ul>
<li>The stunning Pfizer vaccine announcement days ago can be a psychological game changer for Macau stocks that target mass play most likely to ramp first.</li>
<li>Entry points for these three top picks bear potential for strong upside moves by 1Q21.</li>
<li>A possible shortened Macau recovery cycle is not yet baked into the prices here.</li>
</ul>


The stunning Pfizer vaccine announcement days ago can be a psychological game changer for Macau stocks that target mass play most likely to ramp first.
Entry points for these three top picks bear potential for strong upside moves by 1Q21.
A possible shortened Macau recovery cycle is not yet baked into the prices here.


Macau Gaming: Our Highest Conviction Idea: Speedier Arrival of Effective Vaccine Moves These Stocks

Asia gaming and consumer discretionary analyst

Michael Ting

Despite the recent relaxation in travel visas to Macau from the Mainland, the recovery in sector revenues has been weaker than expected. Headwinds such as increased government scrutiny on capital outflow has likely hurt gaming sentiment demand from higher spending VIP and premium mass players. We expect these trends to continue and hence believe that Macau gaming stocks could underperform in the near term. However, beneficiaries of the capital outflow restrictions could boost domestic luxury demand and benefit stocks such as Chow Tai Fook whose share price is +17% MTD vs. -7% for the Hang Seng Index.

Despite the recent relaxation in travel visas to Macau from the Mainland, the recovery in sector revenues has been weaker than expected. Headwinds such as increased government scrutiny on capital outflow has likely hurt gaming sentiment demand from higher spending VIP and premium mass players. We expect these trends to continue and hence believe that Macau gaming stocks could underperform in the near term. However, beneficiaries of the capital outflow restrictions could boost domestic luxury demand and benefit stocks such as Chow Tai Fook whose share price is +17% MTD vs. -7% for the Hang Seng Index.

Macau: If It's Not One Thing, It's Another

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Back on the 11 September, shares in Macau gaming service provider <a href="https://www.smartkarma.com/entities/macau-legend-development-ltd" target="_blank" data-smartkarma-citation="entities:16631:1" rel="noopener">Macau Legend Development (1680 HK)</a> ("MLD") were suspended "<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0914/2020091101464.pdf" target="_blank" rel="noopener">pursuant</a> to the Hong Kong Code on Takeovers and Mergers".
The same day, Levo Chan Weng-lin, chief executive of Macau's junket brand Tak Chun Group, bought a 20.65% stake (~US$173mn) according to the HKEx <a href="https://di.hkex.com.hk/di/NSNoticeSSList.aspx?sa2=ns&amp;sid=87469&amp;corpn=Macau+Legend+Development+Ltd.&amp;sd=16/09/2019&amp;ed=16/09/2020&amp;cid=0&amp;sa1=cl&amp;scsd=16%2f09%2f2019&amp;sced=16%2f09%2f2020&amp;sc=1680&amp;src=MAIN&amp;lang=EN&amp;" target="_blank" rel="noopener">disclosures</a>. 
That acquisition has now been clarified with this morning's <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0921/2020092100034.pdf" target="_blank" rel="noopener">announcement</a> that Chan had entered into a SPA on the 11 September with David Chow and Sheldon Trainor De Girolamo, to acquire 20.65% of shares out or 1.280bn shares.
Because of a prior agreement entered into between Chow inter alia, who are collectively known as the Covenantors (holding &gt;51% of shares out), following the completion of the SPA, Chan is deemed to be acting concert with the Covenantors and De Girolamo, and will therefore be obligated to make an unconditional mandatory general offer.
The MGO Price will be HK$1.05/share, the same price Chan paid for his 20.65% stake. That's a 9.34% premium to the last close.
As always, more below the fold.

 Back on the 11 September, shares in Macau gaming service provider Macau Legend Development (1680 HK) ("MLD") were suspended "pursuant to the Hong Kong Code on Takeovers and Mergers".
The same day, Levo Chan Weng-lin, chief executive of Macau's junket brand Tak Chun Group, bought a 20.65% stake (~US$173mn) according to the HKEx disclosures. 
That acquisition has now been clarified with this morning's announcement that Chan had entered into a SPA on the 11 September with David Chow and Sheldon Trainor De Girolamo, to acquire 20.65% of shares out or 1.280bn shares.
Because of a prior agreement entered into between Chow inter alia, who are collectively known as the Covenantors (holding &gt;51% of shares out), following the completion of the SPA, Chan is deemed to be acting concert with the Covenantors and De Girolamo, and will therefore be obligated to make an unconditional mandatory general offer.
The MGO Price will be HK$1.05/share, the same price Chan paid for his 20.65% stake. That's a 9.34% premium to the last close.
As always, more below the fold.

Macau Legend (1680 HK): Mandatory General Offer

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 2020 Results - Lucror Analytics

SJM Holdings' FY 2020 results were in line with expectations, considering the overall industry softness. Going forward, we expect the company's...

Lucror Analytics

Macau Gaming: Beaten up Sector Has Potential to Reverse

As sentiment begins to turn in Macau Gaming stocks, Global EM investors are positioned at their lowest levels in a decade.

Steven Holden

Macau Gaming: Our Highest Conviction Idea: Speedier Arrival of Effective Vaccine Moves These Stocks

Investors do not yet see impact of latest bullish news on vaccine earlier and more effective immunization levels on player confidence to return to...

Howard J Klein

Macau: If It's Not One Thing, It's Another

The recovery in

Michael Ting

Macau Legend (1680 HK): Mandatory General Offer

Levo Chan Weng-lin, chief executive of Macau's junket brand Tak Chun Group, bought a 20.65%t stake (~US$173mn) in Macau Legend Development (1680...

David Blennerhassett

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