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

Leonard Law, CFA

Senior Credit Analyst

Credit

We view Chandra Asri Petrochemical (CAP) as “Medium Risk” on the LARA scale. CAP is well-positioned as Indonesia's largest petrochemicals producer in a fast-growing market. It has a robust balance sheet and a track record of conservative financial policy. In our view, these positives more than offset the cyclical and commoditised nature of the petrochemicals industry. Nevertheless, the business is dependent on volatile spreads between naphtha and its products. Still, CAP benefits from its strategic location and established customer relationships, which allow it to command a slight premium over the regional benchmark. We note favourably that its large capex programmes, to increase capacity and to expand downstream, have been conservatively funded by a balanced mix of debt and equity (though rights offerings supported by its shareholders). There could be execution risks from its new projects. At present, CAP is seeking strategic partners for its second petrochemical plant (CAP2), which requires estimated capex of USD 5 bn. It has signed an MoU with Mubadala (Abu Dhabi's sovereign wealth fund) and OMV (an Austrian oil & gas group 25% owned by Mubadala) to explore the joint development of the project. Our fundamental Credit Bias on CAP is "Negative", in view of its weaker earnings on account of lower petrochemical margins. The company’s financial profile has deteriorated since FY 2018, with elevated leverage and poor interest coverage. That said, its liquidity profile is sound. We view CAP’s corporate governance as “Moderate” on the LAGA scale. In our view, the active involvement of Siam Cement Group (SCG) as a significant minority shareholder provides adequate checks and balance against controlling shareholder Prajogo Pangestu, who has been linked to allegations of corruption. The composition of the Boards of commissioners and directors is good, with SCG represented on each Board. We also view positively the company’s long operational track record and listing history (since 1994).

  We view Chandra Asri Petrochemical (CAP) as “Medium Risk” on the LARA scale. CAP is well-positioned as Indonesia's largest petrochemicals producer in a fast-growing market. It has a robust balance sheet and a track record of conservative financial policy. In our view, these positives more than offset the cyclical and commoditised nature of the petrochemicals industry. Nevertheless, the business is dependent on volatile spreads between naphtha and its products. Still, CAP benefits from its strategic location and established customer relationships, which allow it to command a slight premium over the regional benchmark. We note favourably that its large capex programmes, to increase capacity and to expand downstream, have been conservatively funded by a balanced mix of debt and equity (though rights offerings supported by its shareholders).   There could be execution risks from its new projects. At present, CAP is seeking strategic partners for its second petrochemical plant (CAP2), which requires estimated capex of USD 5 bn. It has signed an MoU with Mubadala (Abu Dhabi's sovereign wealth fund) and OMV (an Austrian oil & gas group 25% owned by Mubadala) to explore the joint development of the project.   Our fundamental Credit Bias on CAP is "Negative", in view of its weaker earnings on account of lower petrochemical margins. The company’s financial profile has deteriorated since FY 2018, with elevated leverage and poor interest coverage. That said, its liquidity profile is sound.   We view CAP’s corporate governance as “Moderate” on the LAGA scale. In our view, the active involvement of Siam Cement Group (SCG) as a significant minority shareholder provides adequate checks and balance against controlling shareholder Prajogo Pangestu, who has been linked to allegations of corruption. The composition of the Boards of commissioners and directors is good, with SCG represented on each Board. We also view positively the company’s long operational track record and listing history (since 1994). 

Chandra Asri - Tear Sheet - Lucror Analytics