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

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-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.West China Cement

WCC's H1/23 results were softer than expected, as the company reported lower sales volumes and larger-than-expected ASP declines across its plants in Mainland China. In particular, sales volumes and ASP in the company's stronghold of Shaanxi fell 4% and 16% y-o-y, respectively. Positively, WCC's expansion in Africa has been progressing well, with overseas operations now accounting for 27% of revenue. The company's plants in Africa enjoy substantially higher margins than those in China. In our view, the key risk for WCC is uncertainty regarding the extent of its African expansion, with the company reportedly developing another USD 100 mn cement plant in Rwanda. We believe further expansion into Africa will fundamentally change WCC's risk profile.  We move our recommendation on the WESCHI 4.95 26 to "Buy" from "Hold".

  WCC's H1/23 results were softer than expected, as the company reported lower sales volumes and larger-than-expected ASP declines across its plants in Mainland China. In particular, sales volumes and ASP in the company's stronghold of Shaanxi fell 4% and 16% y-o-y, respectively. Positively, WCC's expansion in Africa has been progressing well, with overseas operations now accounting for 27% of revenue. The company's plants in Africa enjoy substantially higher margins than those in China.   In our view, the key risk for WCC is uncertainty regarding the extent of its African expansion, with the company reportedly developing another USD 100 mn cement plant in Rwanda. We believe further expansion into Africa will fundamentally change WCC's risk profile.    We move our recommendation on the WESCHI 4.95 26 to "Buy" from "Hold". 

West China Cement - Earnings Flash - H1 FY 2023 Results - Lucror Analytics

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>China State Construction International and Sinopec Engineering have short term reversal patterns indicating profit taking from recent advances.</li>
<li>China Resources Cement reverses downtrend with volume indicating some near term gains after reporting that 1st half profit was under pressure.</li>
<li>Yum China continues to show downward pressure given the increasing competition in the retail food segment, while Nongfu Spring collapses on news about the safety of its products.</li>
</ul>


China State Construction International and Sinopec Engineering have short term reversal patterns indicating profit taking from recent advances.
China Resources Cement reverses downtrend with volume indicating some near term gains after reporting that 1st half profit was under pressure.
Yum China continues to show downward pressure given the increasing competition in the retail food segment, while Nongfu Spring collapses on news about the safety of its products.


Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)

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 June 14th.</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 China Mobile, BOC, CNOOC, China Shenhua Energy, CCB.</li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of June 14th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for China Mobile, BOC, CNOOC, China Shenhua Energy, CCB.


Hong Kong Connect Flows (Jun 14th): China Mobile, BOC, CNOOC, China Shenhua Energy, CCB

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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/asia-cement-china-holdings" target="_blank" data-smartkarma-citation="entities:3374:1" rel="noopener">Asia Cement China (743 HK)</a> disclosed a Cayman scheme privatisation offer from <a href="https://www.smartkarma.com/entities/asia-cement-corp" target="_blank" data-smartkarma-citation="entities:15350:1" rel="noopener">Asia Cement (1102 TT)</a> at HK$3.22. Including the dividend, the total offer is HK$3.26, 1.7% below the last close. </li>
<li>The offer, which is final, is unattractive as it is materially below net cash and historical trading ranges. The disparity cannot be justified by the potential cash burn this year.</li>
<li>While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. </li>
</ul>



Asia Cement China (743 HK) disclosed a Cayman scheme privatisation offer from Asia Cement (1102 TT) at HK$3.22. Including the dividend, the total offer is HK$3.26, 1.7% below the last close. 
The offer, which is final, is unattractive as it is materially below net cash and historical trading ranges. The disparity cannot be justified by the potential cash burn this year.
While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. 


Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail

China

China West Construction Group Co., Ltd. is an infrastructure development company. The Company manufactures and sells pre-mixed concretes.

Ningxia Building Materials Group Co., Ltd. manufactures and retails cement, clinker, and unplasticised polyvinyl chloride (UPVC) pipes.

Ningxia Building Materials Group (600449 CH)

Xinjiang Qingsong Building Materials and Chemicals Group Co., Ltd. manufactures and markets cement, cement products, and chemical products.  The Company's products include portland cement, concrete, phosphate fertilizers, and other related products.

BBMG Corporation has operation in manufacturing and sales of cement and modern building materials. The Company also operates in property development, property investment and provision of property management services in China.

Xiamen Wanli Stone Stock Co., Ltd. operates as an integrated stone product company. The Company develops quarries and fabricated stone. Xiamen Wanli Stone produces marble, granite, slate, sandstone, and other stones and services.

Asia Cement China Holdings Corporation manufactures cement in China. The Company excavates the raw materials for, and produces, clinker and different types of cement.

CSG Holding Co. Ltd.  manufactures raw sheets of high-grade float glass, archite ctural glass, delicacy glass, automotive glass, new-typed electronic components, and structure ceramic materials. The Company also operates in real estate development.

Henan Tongli Cement Co., Ltd. produces and sells cement.  The Company's products include ordinary Portland cement, Portland slag cement and other cement equipments.

Shandong Jinjing Science & Technology Stock Co., Ltd. manufactures and markets float glass, coated glass, and ultra-white glass.  The Company's products are used in glass processing and construction industries.

Jilin Yatai (Group) Co., Ltd. is an investment holding company.  Through its subsidiaries, the Company develops real estate, manufactures cement and pharmaceuticals, operates hotels and supermarkets, and supplies heat power.

MITANI SEKISAN CO., LTD. manufactures and sells secondary concrete products such as concrete piles & poles.  The Company also provides engineering works and produces environmental products including concrete blocks and gravel.  Mitani Sekisan operates real estate businesses as well.

Universal Cement Corporation manufactures and markets cement, ready-mixed concrete, clinker, and gypsum boards.  The Company mainly sells its products in Taiwan.

Orient Cement Limited manufactures and distributes cement.

Tipco Asphalt Public Company Limited manufactures and distributes asphalt emulsion for use in construction and maintenance of roads. The Company sells its products in both domestic and export markets.

TPI Polene Public Company Limited manufactures cement and ready-mixed concrete, and low-density polyethylene (LDPE) plastic resin used in production of bags, bottles, water pipes, and coating materials.  It is Thailand's sole producer of low-density polyethylene which is marketed under Polene brand name.  Through joint venture, it also produces frit which is raw material in ceramic industry.

City Cement Company operates a cement plant in Saudi Arabia. The Company produces a wide range of cement products.

Loma Negra Cia Industrial Argentina SA operates as a cement manufacturer. The Company produces cement, masonry cement, aggregates, concrete, and lime. Loma Negra Cia Industrial Argentina serves distributors, concrete producers, and industrial customers worldwide.

Hanil Cement co.,Ltd. operates as a cement manufacturing company. The Company produces and sells cement, special cement, ready mixed concrete products, high solidity admixture, and other products. Hanil Cement markets its products throughout Korea.

Prism Johnson Limited manufactures and sells building materials. The Company offers a wide range of products such as cement, ready-mixed concrete, tiles, bath products, aggregates, sand, sanitary ware, faucets, modular kitchens, marbles, and construction chemicals. Prism Johnson serves customers in India.

Lucky Cement Limited manufactures and sells cement.  The Company's cement brands include Lucky Gold Brand, Lucky Brand, Lucky Star Brand. Lucky Cement's main plant site is located at the District Lucky Marwat in the North West Frontier province of Pakistan.

West China Cement Limited produces and distributes cement products.

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West China Cement (2233 HK)

Morning Views Asia: West China Cement

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

Lucror Analytics

West China Cement - Earnings Flash - H1 FY 2023 Results - Lucror Analytics

WCC's H1/23 results were softer than expected, as the company reported lower sales volumes and larger-than-expected ASP declines across its...

Lucror Analytics

Technically Speaking: Breakouts & Breakdowns: HONG KONG (July 17)

Sinopec Engineering and China State Construction have entered short term corrections while CRC has broken its downtrend in the near term. Yum...

David Mudd

Hong Kong Connect Flows (Jun 14th): China Mobile, BOC, CNOOC, China Shenhua Energy, CCB

We analyzed southbound Hong Kong connect flows in the past week and highlight flows for China Mobile, BOC, CNOOC, China Shenhua Energy, CCB.

Ke Yan, CFA, FRM

Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail

The low-balled offer is final. While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail...

Arun George

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