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

Credit Analyst, Lucror Analytics

Shu Hui Woon

Credit Analyst

Credit

We view China SCE as "High Risk" on the LARA scale. Our assessment reflects the risks stemming from the company's fluctuating performance and high financial leverage. SCE specialises in mid-range and high-end residential properties. It has an established presence in Quanzhou and Xiamen, which are both economically vibrant markets with high growth potential. The company has also been diversifying outside Fujian, with the Yangtze River Delta region now its largest contributor in terms of contracted sales. The bulk of the land bank is located in Tier 1 and 2 cities, which will likely see a rebound when the industry recovers. We like SCE's diversification and geographical coverage, but remain concerned about execution risks amid the competitive operating environment. Separately, the company's use of co-operative projects (significant use of JVs and material minority interest) points to off-balance-sheet debt, which would in turn suggest poor corporate governance. Our fundamental Credit Bias on SCE is “Negative” on account of the weak contracted sales, declining liquidity and weakened credit metrics amid the industry downturn. The company also faces heightened refinancing risk for its upcoming debt, while access to onshore funding remains uncertain. Moreover, the company's increased dependency on secured borrowings to raise funds will reduce its financial flexibility. That said, SCE intends to dispose of assets to raise cash, which could temporarily alleviate the liquidity pressure. Its land bank includes land in upper-tier cities, where economic fundamentals might be stronger and sales should rebound once the operating conditions improve. Controversies are "Immaterial" despite reputational risk on account of the increasing number of property-quality related disputes with customers. The ESG Impact on Credit is "Neutral". We note positively the company’s willingness to honour debt obligations.

  We view China SCE as "High Risk" on the LARA scale. Our assessment reflects the risks stemming from the company's fluctuating performance and high financial leverage. SCE specialises in mid-range and high-end residential properties. It has an established presence in Quanzhou and Xiamen, which are both economically vibrant markets with high growth potential. The company has also been diversifying outside Fujian, with the Yangtze River Delta region now its largest contributor in terms of contracted sales.   The bulk of the land bank is located in Tier 1 and 2 cities, which will likely see a rebound when the industry recovers. We like SCE's diversification and geographical coverage, but remain concerned about execution risks amid the competitive operating environment. Separately, the company's use of co-operative projects (significant use of JVs and material minority interest) points to off-balance-sheet debt, which would in turn suggest poor corporate governance.   Our fundamental Credit Bias on SCE is “Negative” on account of the weak contracted sales, declining liquidity and weakened credit metrics amid the industry downturn. The company also faces heightened refinancing risk for its upcoming debt, while access to onshore funding remains uncertain. Moreover, the company's increased dependency on secured borrowings to raise funds will reduce its financial flexibility. That said, SCE intends to dispose of assets to raise cash, which could temporarily alleviate the liquidity pressure. Its land bank includes land in upper-tier cities, where economic fundamentals might be stronger and sales should rebound once the operating conditions improve.   Controversies are "Immaterial" despite reputational risk on account of the increasing number of property-quality related disputes with customers. The ESG Impact on Credit is "Neutral". We note positively the company’s willingness to honour debt obligations. 

China SCE - Tear Sheet - Lucror Analytics