Daily Brief Credit: Morning Views Asia: ABM Investama and more

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.

• ABM Investama
• Nickel Industries
• Road King Infrastructure

Longfor Group’s H1/24 results were acceptable. Earnings declined in line with expectations, driven by lower revenue and margins in the Property Development segment. That said, earnings growth from rentals and services remained robust, with LTM profit from recurring income covering interest expense by 1.6x (FY 2023: 1.4x).

Negatively, net debt increased marginally in H1/24, even though total debt declined. Going forward, we expect the company to continue reducing debt using OCF and refinance its maturing debt using additional operating loans backed by its investment properties. Overall, we believe near-term default risk for Longfor remains low, as the company’s pipeline of new malls should continue to support its access to secured bank loans for refinancing.

• We are initiating coverage on Minerva with an Underperform recommendation.
• We are cautious about the credit impact of the Marfrig acquisition.
• We believe a better entry point into the name may emerge in the future based on our expectation of a weakening credit profile. 

Greentown’s H1/24 results were acceptable, given the above-industry sales and top-line growth. While gross profit declined, the property development gross margin was stable from FY 2023, and remained robust relative to peers. In addition, net debt was stable from FYE 2023. More importantly, the company’s access to onshore financing appears healthy, and liquidity is adequate.

The company remains active in land acquisitions and has a good quality land bank, mostly in high-tier cities in the Yangtze River Delta. Although Greentown is considered a pure-play developer (as its recurring income businesses are small), the company appears to have navigated the industry downturn well, thanks to its cautious approach towards land investments and operating efficiency to support a fast-churn model.

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.

• China Oil And Gas
• First Pacific Co