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 Gajah Tunggal as “High Risk” on the LARA scale. The company has a chequered history, having undergone a number of debt restructurings, largely due to factors beyond its control. The company's key risks are its significant exposure to FX volatility, increasing raw-material prices and supply-chain disruptions. These are compounded by the general business cyclicality, reliance on off-take agreements, as well as intense competition in the domestic market. Positive factors include the company's: [1] six decades of operations; [2] dominant position in the domestic market; [3] favourable location, with proximity to raw-material resources; [4] diversified customer base; and [5] vertical integration. Our fundamental Credit Bias on Gajah Tunggal is "Negative". The company's exposure to rising raw material prices (mainly rubber) will continue to pressure margins, offsetting higher sale volumes. Gajah Tunggal is also exposed to IDR depreciation, as its raw material costs are denominated in USD while sales are mostly derived domestically. Moreover, the company's leverage and coverage ratios have weakened since FY 2020, and could deteriorate further amid global economic headwinds. That said, we note that the amortising nature of Gajah Tunggal's syndicated banking facility may drive the company to control debt growth. Controversies are "Material", mainly owing to corruption allegations against founder Sjamsul Nursalim and his wife, Itjih Nursalim. In June 2019, Indonesia's anti-graft agency (KPK) named the two individuals as suspects in an alleged misappropriation of government bailout funds during the 1997-1998 Asian Financial Crisis. This case has repeatedly resurfaced over the last two decades, with no conclusion. Hence, we believe the controversy has little financial impact on Gajah Tunggal, though some reputational issues persist. Overall, the ESG Impact on Credit is "Moderately Negative".

  We view Gajah Tunggal as “High Risk” on the LARA scale. The company has a chequered history, having undergone a number of debt restructurings, largely due to factors beyond its control. The company's key risks are its significant exposure to FX volatility, increasing raw-material prices and supply-chain disruptions. These are compounded by the general business cyclicality, reliance on off-take agreements, as well as intense competition in the domestic market. Positive factors include the company's: [1] six decades of operations; [2] dominant position in the domestic market; [3] favourable location, with proximity to raw-material resources; [4] diversified customer base; and [5] vertical integration.   Our fundamental Credit Bias on Gajah Tunggal is "Negative". The company's exposure to rising raw material prices (mainly rubber) will continue to pressure margins, offsetting higher sale volumes. Gajah Tunggal is also exposed to IDR depreciation, as its raw material costs are denominated in USD while sales are mostly derived domestically. Moreover, the company's leverage and coverage ratios have weakened since FY 2020, and could deteriorate further amid global economic headwinds. That said, we note that the amortising nature of Gajah Tunggal's syndicated banking facility may drive the company to control debt growth.   Controversies are "Material", mainly owing to corruption allegations against founder Sjamsul Nursalim and his wife, Itjih Nursalim. In June 2019, Indonesia's anti-graft agency (KPK) named the two individuals as suspects in an alleged misappropriation of government bailout funds during the 1997-1998 Asian Financial Crisis. This case has repeatedly resurfaced over the last two decades, with no conclusion. Hence, we believe the controversy has little financial impact on Gajah Tunggal, though some reputational issues persist. Overall, the ESG Impact on Credit is "Moderately Negative". 

Gajah Tunggal - Tear Sheet - Lucror Analytics