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

In our view, Chandra Asri Petrochemical’s Q4 numbers were significantly weaker than expected, resulting in the FY 2018 results missing our forecasts. Profitability dropped sharply in Q4, owing to lower petrochemical margins, as crack spreads were lower compared to the cyclical high last year. However, the balance sheet remained robust, with a net cash position, credit metrics were healthy, and liquidity was sound. We expect FY 2019 to be weaker than the prior year, and probably in line with Q4/18. That said, Q4/18 seems to have been the trough, as the EBITDA margin was at 11% (management had guided for 10-20%). Revenues will be supported by the completion of new plants. In early August 2018, the group announced the completion of its butadiene plant expansion, which increased capacity by 37% to 137 ktpa. The new 400 ktpa polyethylene plant may also be completed in 2019. Thus, we expect credit metrics to worsen but to remain healthy, with Debt/EBITDA of 2-2.5x, which is still decent, both on an absolute basis and when considering the down cycle. Our fundamental Credit Bias is “Stable”, as the company's balance sheet strength more than offsets its large capex plan and margin pressure on account of tightening spreads between naphtha and its products. We move to "Hold" from our "Buy" recommendation on the TPIAIJ '24s. The OAS has come in significantly since December, 2018 and we now see limited scope for further tightening.

   In our view, Chandra Asri Petrochemical’s Q4 numbers were significantly weaker than expected, resulting in the FY 2018 results missing our forecasts. Profitability dropped sharply in Q4, owing to lower petrochemical margins, as crack spreads were lower compared to the cyclical high last year. However, the balance sheet remained robust, with a net cash position, credit metrics were healthy, and liquidity was sound.    We expect FY 2019 to be weaker than the prior year, and probably in line with Q4/18. That said, Q4/18 seems to have been the trough, as the EBITDA margin was at 11% (management had guided for 10-20%). Revenues will be supported by the completion of new plants. In early August 2018, the group announced the completion of its butadiene plant expansion, which increased capacity by 37% to 137 ktpa. The new 400 ktpa polyethylene plant may also be completed in 2019. Thus, we expect credit metrics to worsen but to remain healthy, with Debt/EBITDA of 2-2.5x, which is still decent, both on an absolute basis and when considering the down cycle.    Our fundamental Credit Bias is “Stable”, as the company's balance sheet strength more than offsets its large capex plan and margin pressure on account of tightening spreads between naphtha and its products.    We move to "Hold" from our "Buy" recommendation on the TPIAIJ '24s. The OAS has come in significantly since December, 2018 and we now see limited scope for further tightening. 

Chandra Asri - Earnings Flash - FY 2018 Results - Lucror Analytics