Daily Brief Financials: China South City, Record PLC, SES AI Corp and more

We believe China South City’s (CSC) proposed bond extension is overall acceptable to bondholders. The company plans to continue paying coupons in cash, albeit at a reduced coupon rate. In addition, the absence of a haircut would preserve bondholders’ claims.

We note negatively that the amortisation payments would only begin in 2026. This reflects the company’s very tight liquidity, considering its failure to pay the coupon in November 2023 and the dismal H1/23-24 results. Moreover, CSC is not proposing to add new credit enhancement measures, even though the latest extension has demonstrated the failure of the existing keepwell deed and asset pledge to ensure offshore debt repayment.

CSC has ceased disclosure of quarterly contracted sales since 2022, and we believe it has now fully shifted business focus to commercial properties. However, the company’s commercial properties were affected by a depressed macro market and lower demand for leasing, and we do not foresee a related turnaround in the near future. Liquidity was extremely weak, with Cash/ST Debt of only 9% as of end-September.

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 South City
• NagaCorp Ltd

In H124, Record posted steady management fee growth of 3% y-o-y to £19.6m as the company benefited from a higher assets under management equivalent (AUME) base. Total revenues, however, were down 3% as performance fees in H123 outweighed those earned in H124. Profit before tax was down 17% y-o-y to £6.3m as Record incurred costs related to its expansion and modernisation initiatives. In line with its progressive dividend policy, Record increased its dividend by 5% y-o-y to 2.15p per share. After four years as CEO, Leslie Hill announced her retirement and will be succeeded by Dr Jan Witte (CEO of the subsidiary Record Currency Management) at the end of FY24 in March. He has also been appointed to the board as executive director with effect from 1 January 2024. Leslie will maintain her share ownership in Record and will assist senior management in Record’s transition phase.

• SES AI Corp. will be hosting its third annual Battery World event on December 12, 2023, at 9:00 am ET.
• SES develops and produces high-performance, Li- Metal rechargeable batteries for electric vehicles (EVs) and other applications.
• During Battery World, the company is expected to announce the world’s inaugural B-sample Joint Development Agreement with a prominent automotive OEM.