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.

High Yield Experts

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

Credit

CAR Inc is roadshowing a new offering of Notes, potentially with a three-year tenor. Part of the new Notes will be exchanged for the USD 500 mn outstanding 6.125% 2020 Notes, while some of the proceeds will be used to refinance the USD 250 mn syndicated loan due in November. We view CAR Inc as "High Risk" on the LARA scale. Business fundamentals are deteriorating due to declining economies of scale (as car prices bottom out) and greater competition. The company is engaged in a price war for market share, and has sharply lowered its daily rental rates. At the same time, substantial maintenance capex is required to sustain the ageing fleet. In addition, the credit profile may limit CAR Inc's ability to raise further borrowings to fund capex, and EBITDA is unlikely to rise significantly in the near term. Further key risks in the near term include aggressive and ongoing share buybacks, stiffer competition from eHi Car Services or ride-sharing apps, and regulatory concerns. On the positive side, the credit is supported by the fast-growing self-driven car rental industry in China. Moreover, the company holds the No. 1 market position in terms of size, in a business that usually favours economies of scale, albeit it has stopped benefiting from economies of scale. Our fundamental Credit Bias remains “Negative”, as we expect further operational deterioration, misalignment of interests (share buybacks and adverse related-party transactions) and poor capital allocation. We assess the company as “Inadequate” on the LAGA scale, mainly due to the lack of transparency, management's overly optimistic tone with regard to UCAR and the deteriorating core business, the company's aggressive share buybacks, and the unclear alignment of interests. Chairman Lu Zhengyao cashed out his entire stake in the company in 2016, and widely touted partner Hertz has almost entirely exited its stake, with its representative resigning from CAR Inc's Board. We think the proposed Notes may price at 8.0%, or where the EHICAR '22s currently trade. We derive this by adding a new-issue premium to the CARINC Notes, which have mostly been trading at a slight premium to the EHICAR paper (lower spreads).

   CAR Inc is roadshowing a new offering of Notes, potentially with a three-year tenor. Part of the new Notes will be exchanged for the USD 500 mn outstanding 6.125% 2020 Notes, while some of the proceeds will be used to refinance the USD 250 mn syndicated loan due in November.    We view CAR Inc as "High Risk" on the LARA scale. Business fundamentals are deteriorating due to declining economies of scale (as car prices bottom out) and greater competition. The company is engaged in a price war for market share, and has sharply lowered its daily rental rates. At the same time, substantial maintenance capex is required to sustain the ageing fleet. In addition, the credit profile may limit CAR Inc's ability to raise further borrowings to fund capex, and EBITDA is unlikely to rise significantly in the near term. Further key risks in the near term include aggressive and ongoing share buybacks, stiffer competition from eHi Car Services or ride-sharing apps, and regulatory concerns. On the positive side, the credit is supported by the fast-growing self-driven car rental industry in China. Moreover, the company holds the No. 1 market position in terms of size, in a business that usually favours economies of scale, albeit it has stopped benefiting from economies of scale.    Our fundamental Credit Bias remains “Negative”, as we expect further operational deterioration, misalignment of interests (share buybacks and adverse related-party transactions) and poor capital allocation.    We assess the company as “Inadequate” on the LAGA scale, mainly due to the lack of transparency, management's overly optimistic tone with regard to UCAR and the deteriorating core business, the company's aggressive share buybacks, and the unclear alignment of interests. Chairman Lu Zhengyao cashed out his entire stake in the company in 2016, and widely touted partner Hertz has almost entirely exited its stake, with its representative resigning from CAR Inc's Board.    We think the proposed Notes may price at 8.0%, or where the EHICAR '22s currently trade. We derive this by adding a new-issue premium to the CARINC Notes, which have mostly been trading at a slight premium to the EHICAR paper (lower spreads). 

Car Inc

CAR Inc - Tear Sheet - Lucror Analytics