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

The Europe HY Trade Book for April 2021 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

  The Europe HY Trade Book for April 2021 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry. 

Europe HY Trade Book - April 2021 - 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-13022'>Anton Oilfield</a></li><li><a href='#lucror-entity-10675'>Honghua Group</a></li><li><a href='#lucror-entity-8550'>Pakuwon Jati</a></li><li><a href='#lucror-entity-216'>Tata Motors Ltd</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.Anton OilfieldHonghua GroupPakuwon JatiTata Motors Ltd

Morning Views Asia: Anton Oilfield, Honghua Group, Pakuwon Jati, Tata Motors Ltd

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

In a cyclical and volatile commodity sector, such as lithium, profitability is key during lean times.
Brisbane-based <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> and Perth-based <a href="https://www.smartkarma.com/entities/galaxy-resources-ltd" target="_blank" data-smartkarma-citation="entities:13914:1" rel="noopener">Galaxy Resources (GXY AU)</a> are in effect, the poster children for Aussie-listed lithium producers.  Orocobre extracts the commodity from Argentinian brine ponds, and Galaxy from Western Australian rock. Two different lithium products in two different jurisdictions.
Amid a downturn in the price of the battery commodity and a reduction in tonnes exported, both Galaxy and Orocobre splashed red ink in <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02205130-6A969035?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">FY19</a> (Dec-end) and <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02273544-2A1246100?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">FY20</a> (June-end) respectively.
The downturn resulted in <a href="https://www.smartkarma.com/entities/alita-resources-ltd" target="_blank" data-smartkarma-citation="entities:16331:1" rel="noopener">Alita Resources (AMS SP)</a> - in which Galaxy is a shareholder - going into administration, a situation that is still working its way through the <a href="https://www.miningweekly.com/article/galaxy-joins-the-fight-for-bald-hill-2021-02-12" target="_blank" rel="noopener">sale of asset process</a>. In addition, <a href="https://www.smartkarma.com/entities/pilbara-minerals-ltd" target="_blank" data-smartkarma-citation="entities:7460:1" rel="noopener">Pilbara Minerals (PLS AU)</a> acquired <a href="https://www.smartkarma.com/entities/altura-mining-ltd" target="_blank" data-smartkarma-citation="entities:13385:1" rel="noopener">Altura Mining (AJM AU)</a> late last year after the latter entered receivership in November as the raw battery materials market nose-dived.
A reversal of fortunes has seen increased demand, and price, for Galaxy's spodumene concentrate, and Orocobre's Argentinian lithium bicarbonate. In its quarterly update on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02362944-2A1292351?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">13 April</a>, Orocobre said pricing was up more than 50% since the Dec-20 quarter, and nearly 90% in the last six months. 
<h3>The NEW News</h3>
After circling each other for a couple of years, Galaxy and Orocobre entered into a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02364542-2A1293132?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">binding agreement</a> earlier this week under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy.
Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share. Upon implementation, Orocobre shareholders will own 54.2% of the enlarged entity, and Galaxy shareholders will own the remaining 45.8%.
The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets.
The two companies classify this as a merger of equals, and in many respects it is. Each company will appoint four directors to the new nine-person board, and the chairman and deputy chairman’s jobs for the coming 12 months will be split down the middle until replacements are found.
This is an intelligent merger. Not only does it establish a foothold in South American brines and Western Australian/North American spodumene, something the world’s largest lithium producers seek to achieve, the new entity will be better positioned to weather a material correction in lithium prices.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/201/665/original/image_29076439221618885833728.png?1618885835" class="editor-image img-responsive" data-smartkarma-image-id="201665"></figure>

In a cyclical and volatile commodity sector, such as lithium, profitability is key during lean times.
Brisbane-based Orocobre Ltd (ORE AU) and Perth-based Galaxy Resources (GXY AU) are in effect, the poster children for Aussie-listed lithium producers.  Orocobre extracts the commodity from Argentinian brine ponds, and Galaxy from Western Australian rock. Two different lithium products in two different jurisdictions.
Amid a downturn in the price of the battery commodity and a reduction in tonnes exported, both Galaxy and Orocobre splashed red ink in FY19 (Dec-end) and FY20 (June-end) respectively.
The downturn resulted in Alita Resources (AMS SP) - in which Galaxy is a shareholder - going into administration, a situation that is still working its way through the sale of asset process. In addition, Pilbara Minerals (PLS AU) acquired Altura Mining (AJM AU) late last year after the latter entered receivership in November as the raw battery materials market nose-dived.
A reversal of fortunes has seen increased demand, and price, for Galaxy's spodumene concentrate, and Orocobre's Argentinian lithium bicarbonate. In its quarterly update on the 13 April, Orocobre said pricing was up more than 50% since the Dec-20 quarter, and nearly 90% in the last six months. 
The NEW News
After circling each other for a couple of years, Galaxy and Orocobre entered into a binding agreement earlier this week under which the two companies will merge via a Galaxy Scheme, following which, Orocobre will hold 100% in Galaxy.
Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share. Upon implementation, Orocobre shareholders will own 54.2% of the enlarged entity, and Galaxy shareholders will own the remaining 45.8%.
The A$4bn combined entity will be the fifth-largest lithium producer - and third-largest outside of China - boasting a diversified product base via four producing assets.
The two companies classify this as a merger of equals, and in many respects it is. Each company will appoint four directors to the new nine-person board, and the chairman and deputy chairman’s jobs for the coming 12 months will be split down the middle until replacements are found.
This is an intelligent merger. Not only does it establish a foothold in South American brines and Western Australian/North American spodumene, something the world’s largest lithium producers seek to achieve, the new entity will be better positioned to weather a material correction in lithium prices.


The Asia HY Trade Book for the month of April 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 April 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 - April 2021 - 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-2667'>Soechi Lines</a></li><li><a href='#lucror-entity-216'>Tata Motors Ltd</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.Soechi LinesTata Motors Ltd

Morning Views Asia: Soechi Lines, Tata Motors Ltd

India

Tata Motors Limited manufactures cars and commercial automotive vehicles. The Company designs, manufactures, and sells heavy, medium, and small commercial vehicles including trucks, tankers, vans, buses, ambulances and minibuses. Tata also manufactures small cars and sports utility vehicles.

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Tata Motors Ltd (TTMT IN)

Europe HY Trade Book - April 2021 - Lucror Analytics

The Europe HY Trade Book for April 2021 includes high-conviction trade ideas drawn from our European HY coverage universe, along with...

Lucror Analytics

Morning Views Asia: Anton Oilfield, Honghua Group, Pakuwon Jati, Tata Motors Ltd

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

Lucror Analytics

Orocobre/Galaxy Resources: On A Charge

The merged entity will capture a greater market share of the lithium supply in coming years, and capitalise on mining synergies. Plus afford the...

David Blennerhassett

Asia HY Trade Book - April 2021 - Lucror Analytics

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

Lucror Analytics

Morning Views Asia: Soechi Lines, Tata Motors Ltd

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

Lucror Analytics

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