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.

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High Yield Experts

Credit Analyst, Lucror Analytics

Chuanyi Zhou

Credit Analyst

Credit

Lifestyle International Holdings / Credit

Lifestyle International Holdings (1212 HK)

We view Lifestyle International (LIHL) as “Medium Risk” on the LARA scale. This takes into account the risks associated with the company’s Kai Tak project, as well as the recovering Hong Kong retail market. We also note the strong competitive position of LIHL’s flagship stores in Causeway Bay and Tsim Sha Tsui. The company enjoys an advantage over rivals as its stores have prime locations, strong branding and low rental and inventory. Our fundamental Credit Bias on LIHL is “Stable”, given the stability and strong cash-generating abilities of the two existing malls. Barring significant cash-burn events, the company should be able to manage the substantial amount of debt it will have before the Kai Tak site opens for business. That said, we are cautious on the execution risk related to the project, and the refinancing pressure due to the 2021-2022 maturity wall. We view LIHL’s corporate governance as “Weak” on the LAGA scale, considering: [1] that the company is controlled by Chairman Lau Luen Hung Thomas, who holds a c. 69% stake (weak); [2] the family dominates the Board, with the only two EDs being the Chairman’s son and daughter, while the Chairman’s sister is a NED (weak); [3] the increasingly aggressive dividend payout (weak); and [4] the related-party transactions with the Chow Tai Fook group (weak). That said, we consider this a less significant factor as Chow Tai Fook has sold its 20% stake in LIHL. .

   We view Lifestyle International (LIHL) as “Medium Risk” on the LARA scale. This takes into account the risks associated with the company’s Kai Tak project, as well as the recovering Hong Kong retail market. We also note the strong competitive position of LIHL’s flagship stores in Causeway Bay and Tsim Sha Tsui. The company enjoys an advantage over rivals as its stores have prime locations, strong branding and low rental and inventory.    Our fundamental Credit Bias on LIHL is “Stable”, given the stability and strong cash-generating abilities of the two existing malls. Barring significant cash-burn events, the company should be able to manage the substantial amount of debt it will have before the Kai Tak site opens for business. That said, we are cautious on the execution risk related to the project, and the refinancing pressure due to the 2021-2022 maturity wall.    We view LIHL’s corporate governance as “Weak” on the LAGA scale, considering: [1] that the company is controlled by Chairman Lau Luen Hung Thomas, who holds a c. 69% stake (weak); [2] the family dominates the Board, with the only two EDs being the Chairman’s son and daughter, while the Chairman’s sister is a NED (weak); [3] the increasingly aggressive dividend payout (weak); and [4] the related-party transactions with the Chow Tai Fook group (weak). That said, we consider this a less significant factor as Chow Tai Fook has sold its 20% stake in LIHL.     . 

Lifestyle International - Tear Sheet - Lucror Analytics