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.

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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

<ul>
<li>West China Cement's (WCC) FY 2024 results remained weak, albeit slightly improved from H1.</li>
<li>Sales volumes and ASP in Mainland China continued to decline, amid poor demand from the real estate and infrastructure sectors.</li>
<li>Meanwhile, performance in Africa was mixed, as rising sales volumes were offset by softer ASP.</li>
</ul>


West China Cement's (WCC) FY 2024 results remained weak, albeit slightly improved from H1.
Sales volumes and ASP in Mainland China continued to decline, amid poor demand from the real estate and infrastructure sectors.
Meanwhile, performance in Africa was mixed, as rising sales volumes were offset by softer ASP.


West China Cement - Deterioration in Earnings and Leverage Continues

<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: West China Cement, China Vanke, Sunny Optical</li>
<li>
In the US, the January CPI came in higher than expected at 3.0% y-o-y (2.9% e / 2.9% p) and 0.5% m-o-m (0.3% e / 0.4% p). The core CPI (excluding food and energy) accelerated slightly to 3.3% y-o-y (3.1% e / 3.2% p) and 0.4% m-o-m (0.3% e / 0.2% p).
</li>
<li>Speaking after the CPI data release, Fed Chairman Jerome Powell acknowledged that the CPI figure came in above nearly every forecast, but cautioned against overreacting to one or two readings.</li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: West China Cement, China Vanke, Sunny Optical

In the US, the January CPI came in higher than expected at 3.0% y-o-y (2.9% e / 2.9% p) and 0.5% m-o-m (0.3% e / 0.4% p). The core CPI (excluding food and energy) accelerated slightly to 3.3% y-o-y (3.1% e / 3.2% p) and 0.4% m-o-m (0.3% e / 0.2% p).

Speaking after the CPI data release, Fed Chairman Jerome Powell acknowledged that the CPI figure came in above nearly every forecast, but cautioned against overreacting to one or two readings.


<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: West China Cement, Greentown China, Softbank Group, Bharti Airtel</li>
<li>In the US, the January nonfarm payrolls came in below estimates at 143 k (175 k e / 307 k revised p). That said, payrolls for December were revised upwards to 307 k (from 256 k), with the two-month revision rising to 100 k (from negative 8 k).</li>
<li>The average hourly earnings in January increased to 0.5% m-o-m (0.3% e / 0.3% p), and stood at 4.1% y-o-y (3.8% e / 4.1% revised p). The unemployment rate declined to 4.0% in the same month (4.1% e / 4.1% p).</li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: West China Cement, Greentown China, Softbank Group, Bharti Airtel
In the US, the January nonfarm payrolls came in below estimates at 143 k (175 k e / 307 k revised p). That said, payrolls for December were revised upwards to 307 k (from 256 k), with the two-month revision rising to 100 k (from negative 8 k).
The average hourly earnings in January increased to 0.5% m-o-m (0.3% e / 0.3% p), and stood at 4.1% y-o-y (3.8% e / 4.1% revised p). The unemployment rate declined to 4.0% in the same month (4.1% e / 4.1% p).


<ul>
<li>In today's Morning Views publication we comment on developments of the following high yield issuers: West China Cement, Adani Ports, Vedanta Resources, Softbank Group, Tata Motors, UPL Limited</li>
<li>In the US, the December personal spending came in above estimates at 0.7% m-o-m (0.5% e / 0.6% revised p), while personal income inched up to 0.4% m-o-m (0.4% e / 0.3% p).</li>
<li>Separately, the PCE price index climbed to 2.6% y-o-y (2.6% e / 2.4% p) and 0.3% m-o-m (0.3% e / 0.1% p). That said, the core PCE price index (the Fed's preferred measure of inflation) was largely stable at 2.8% y-o-y (2.8% e / 2.8% p) and 0.2% m-o-m (0.2% e / 0.1% p).</li>
</ul>


In today's Morning Views publication we comment on developments of the following high yield issuers: West China Cement, Adani Ports, Vedanta Resources, Softbank Group, Tata Motors, UPL Limited
In the US, the December personal spending came in above estimates at 0.7% m-o-m (0.5% e / 0.6% revised p), while personal income inched up to 0.4% m-o-m (0.4% e / 0.3% p).
Separately, the PCE price index climbed to 2.6% y-o-y (2.6% e / 2.4% p) and 0.3% m-o-m (0.3% e / 0.1% p). That said, the core PCE price index (the Fed's preferred measure of inflation) was largely stable at 2.8% y-o-y (2.8% e / 2.8% p) and 0.2% m-o-m (0.2% e / 0.1% p).


West China Cement (WCC) has released softer than expected H1/24 numbers. The company’s revenue and profitability in Mainland China continued to decline amid the real estate slump, while its performance in Africa was mixed. ​FCF remained negative and leverage continued to deteriorate. That said, liquidity appears manageable, as we expect WCC to refinance its short-term loans. The main debt maturity wall is in July 2026, when the USD 600 mn notes will come due. In our view, the key risk is uncertainty over the extent of WCC’s overseas expansion. The company stated that it has no plans for capacity expansion in FY 2024, other than the ongoing developments in Ethiopia and Uzbekistan. However, this contradicts media reports on WCC’s investments in Rwanda, Uganda and Zimbabwe. Hence, we are unsure about the level of the company's planned overseas capex. Going forward, cement demand in Mainland China is likely to remain weak, due to the slowdown in infrastructure investment (with lower growth) and continued decline in real estate investment.

  West China Cement (WCC) has released softer than expected H1/24 numbers. The company’s revenue and profitability in Mainland China continued to decline amid the real estate slump, while its performance in Africa was mixed. ​FCF remained negative and leverage continued to deteriorate. That said, liquidity appears manageable, as we expect WCC to refinance its short-term loans. The main debt maturity wall is in July 2026, when the USD 600 mn notes will come due.   In our view, the key risk is uncertainty over the extent of WCC’s overseas expansion. The company stated that it has no plans for capacity expansion in FY 2024, other than the ongoing developments in Ethiopia and Uzbekistan. However, this contradicts media reports on WCC’s investments in Rwanda, Uganda and Zimbabwe. Hence, we are unsure about the level of the company's planned overseas capex. Going forward, cement demand in Mainland China is likely to remain weak, due to the slowdown in infrastructure investment (with lower growth) and continued decline in real estate investment. 

West China Cement - Earnings Flash - H1 FY 2024 Results - Lucror Analytics

China

West China Cement Limited produces and distributes cement products.

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West China Cement (2233 HK)

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West China Cement (WCC) has released softer than expected H1/24 numbers. The company’s revenue and profitability in Mainland China continued to...

Lucror Analytics

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