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

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

Analyst

Steve

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/west-china-cement-ltd" target="_blank" data-smartkarma-citation="entities:9423:1" rel="noopener">West China Cement (2233 HK)</a> is a cement company based in Western China.  Sales volume in Africa in 2023 was 2.6 million tons, up 117% from 1.2 million tons in 2022. </li>
<li>The company has 2 million tons of cement capacity in Mozambique, 1.5 million tons in Congo, and 1.3 million tons in Ethiopia.  </li>
<li>The company is trading at 4x 2024E PE.  I believe the risk reward is quite high here. </li>
</ul>



West China Cement (2233 HK) is a cement company based in Western China.  Sales volume in Africa in 2023 was 2.6 million tons, up 117% from 1.2 million tons in 2022. 
The company has 2 million tons of cement capacity in Mozambique, 1.5 million tons in Congo, and 1.3 million tons in Ethiopia.  
The company is trading at 4x 2024E PE.  I believe the risk reward is quite high here. 


West China Cement (2233 HK):  African Cement Play At 4x 2024E PE

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-30639'>Nickel Industries </a></li><li><a href='#lucror-entity-9423'>West China Cement</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.Nickel Industries West China Cement

Morning Views Asia: Nickel Industries , West China Cement

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of November 8th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for Tencent, Xiaomi, Alibaba, HKEx, CCB, SMIC.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of November 8th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Tencent, Xiaomi, Alibaba, HKEx, CCB, SMIC.


Hong Kong Connect Flows (Nov 8th): Tencent, Xiaomi, Alibaba, HKEx, CCB, SMIC

West China Cement's (WCC) FY 2023 results were soft, but in line with expectations. The company’s profitability in Mainland China continued to weaken, albeit this was partly offset by rising sales volumes and ASP from its African operations. As a result, operating profit in Africa climbed above that for Mainland China for the first time, with the African segment accounting for 31% of total revenue and 74% of operating profit. In our view, the key risk for investors is WCC’s seemingly relentless expansion in Africa, which is likely to further weaken its leverage. Moreover, we are concerned that further expansion in this region will fundamentally change WCC's risk profile from a relatively stable infrastructure-led Chinese business to one that is highly exposed to event risks in frontier markets. The company's African businesses could be exposed to higher geopolitical, regulatory and ESG risks, which are less well understood by investors.

  West China Cement's (WCC) FY 2023 results were soft, but in line with expectations. The company’s profitability in Mainland China continued to weaken, albeit this was partly offset by rising sales volumes and ASP from its African operations. As a result, operating profit in Africa climbed above that for Mainland China for the first time, with the African segment accounting for 31% of total revenue and 74% of operating profit.   In our view, the key risk for investors is WCC’s seemingly relentless expansion in Africa, which is likely to further weaken its leverage. Moreover, we are concerned that further expansion in this region will fundamentally change WCC's risk profile from a relatively stable infrastructure-led Chinese business to one that is highly exposed to event risks in frontier markets. The company's African businesses could be exposed to higher geopolitical, regulatory and ESG risks, which are less well understood by investors. 

West China Cement - Earnings Flash - FY 2023 Results - Lucror Analytics

China

West China Cement Limited produces and distributes cement products.

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West China Cement (2233 HK)

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

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