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 Asia HY Trade Recommendations report for January includes a summary of our recommendations, as well as our high-conviction ideas. We also provide relative-value charts and lists of the bonds in the Lucror Asia HY index.

   The Asia HY Trade Recommendations report for January includes a summary of our recommendations, as well as our high-conviction ideas. We also provide relative-value charts and lists of the bonds in the Lucror Asia HY index. 

Asia HY Trade Recommendations - January 2019 - Lucror Analytics

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Thematic (Sector/Industry)

In previous credit cycles managed by Beijing, VIP and Mass GGR demonstrated a close correlation to M1 albeit with delays.  Change in M1 typically led VIP growth by 2-3 quarters. Change in VIP GGR growth led Mass GGR by 1 month.  M1 growth in China peaked at 33.2% in Q4 2009, driven by Beijing’s stimulus program to fend off the slowdown from the global financial crisis started in the US in 2008 spreading to Europe in 2009. VIP GGR growth peaked at 99% YoY in Q2 2010 and Mass up 37% immediately after.  The latest credit cycle in China peaked in Q3 2016, with M1 up 25%, 3 quarters ahead of VIP growth peaking at 35%. (Exhibit 1)<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/438/original/1.jpg?1547412238" class="editor-image img-responsive" data-smartkarma-image-id="75438"></figure>

In previous credit cycles managed by Beijing, VIP and Mass GGR demonstrated a close correlation to M1 albeit with delays.  Change in M1 typically led VIP growth by 2-3 quarters. Change in VIP GGR growth led Mass GGR by 1 month.  M1 growth in China peaked at 33.2% in Q4 2009, driven by Beijing’s stimulus program to fend off the slowdown from the global financial crisis started in the US in 2008 spreading to Europe in 2009. VIP GGR growth peaked at 99% YoY in Q2 2010 and Mass up 37% immediately after.  The latest credit cycle in China peaked in Q3 2016, with M1 up 25%, 3 quarters ahead of VIP growth peaking at 35%. (Exhibit 1)

Macau Gaming - Historical Correlation B/T Gaming GGR and M1

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

"There are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded...until we get a deal with China. It's not going to be just Apple." Kevin Hassett, Chairman of the Council of Economic Advisers, speaking last week‘I have no use whatsoever for projections or forecasts. They create an illusion of apparent precision. The more meticulous they are, the more concerned you should be.’ Warren Buffet

"There are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded...until we get a deal with China. It's not going to be just Apple." Kevin Hassett, Chairman of the Council of Economic Advisers, speaking last week‘I have no use whatsoever for projections or forecasts. They create an illusion of apparent precision. The more meticulous they are, the more concerned you should be.’ Warren Buffet

Macau Offers Positive China Consumer Surprise

Sentiment of Macau gaming stocks is extremely low right now with buy-side consensus 0-10% YoY decline in VIP and 5-10% increase in mass segment in 2019.  We are more positive given our latest casino tracking intelligence.  Discretionary spending in China has slowed but it has not collapsed.  Cultural heritage and gaming habits are counter cyclical support for casino businesses in Asian markets.  Upside in casino GGR in next few months could provide a catalyst for a rally as confidence rebounds.

Sentiment of Macau gaming stocks is extremely low right now with buy-side consensus 0-10% YoY decline in VIP and 5-10% increase in mass segment in 2019.  We are more positive given our latest casino tracking intelligence.  Discretionary spending in China has slowed but it has not collapsed.  Cultural heritage and gaming habits are counter cyclical support for casino businesses in Asian markets.  Upside in casino GGR in next few months could provide a catalyst for a rally as confidence rebounds.   

Macau Gaming GGR Rebounding on High Rolling Demand and Easy Comp

<div class="content-remarks">
<blockquote>‘However, given the lagged impact of a spate of policy easing measures implemented since June to bolster growth against trade war risks, we should start seeing sequential revenue growth at the baccarat tables early next year. At current valuations, free cashflow yields across the sector are 7-9% and EV to EBITDA multiples 9-12x, so there is value emerging for the patient, assuming no radical regulatory overhaul while Macau names offer leveraged upside in a wider China/AXJ rally should trade downside fears prove excessive in Q4…’ </blockquote>
Weekly Insight, September 18th (available on Bloomberg at ENTX)
</div>


‘However, given the lagged impact of a spate of policy easing measures implemented since June to bolster growth against trade war risks, we should start seeing sequential revenue growth at the baccarat tables early next year. At current valuations, free cashflow yields across the sector are 7-9% and EV to EBITDA multiples 9-12x, so there is value emerging for the patient, assuming no radical regulatory overhaul while Macau names offer leveraged upside in a wider China/AXJ rally should trade downside fears prove excessive in Q4…’ 
Weekly Insight, September 18th (available on Bloomberg at ENTX)


Macau Casinos Look Winners from China Stimulus

Hong Kong

Wynn Macau, Limited owns and operates Wynn Macau, a destination casino resort currently featuring hotel rooms and suites, a casino, casual and fine dining restaurants, retail space and leisure amenities.

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Wynn Macau Ltd (1128 HK)

Asia HY Trade Recommendations - January 2019 - Lucror Analytics

The Asia HY Trade Recommendations report for January includes a summary of our recommendations, as well as our high-conviction ideas. We also...

Lucror Analytics

Macau Gaming - Historical Correlation B/T Gaming GGR and M1

In previous credit cycles managed by Beijing, VIP and Mass GGR demonstrated a close correlation to M1 albeit with delays. Change in M1 typically...

JL Warren Capital

Macau Offers Positive China Consumer Surprise

"There are a heck of a lot of U.S. companies that have a lot of sales in China that are basically going to be watching their earnings be...

Sean Maher

Macau Gaming GGR Rebounding on High Rolling Demand and Easy Comp

Sentiment of Macau gaming stocks is extremely low right now with buy-side consensus 0-10% YoY decline in VIP and 5-10% increase in mass segment in...

JL Warren Capital

Macau Casinos Look Winners from China Stimulus

‘However, given the lagged impact of a spate of policy easing measures implemented since June to bolster growth against trade war risks, we should...

Sean Maher

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