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

Debt Capital Markets

We view Pan Brothers as “High Risk” on the LARA scale. The company is a small garment manufacturer in the challenging textile industry, but is run by passionate managers/shareholders. Our assessment reflects risks associated with: [1] high financial leverage due to working capital build-up and capital investment, mitigated by an equity injection in 2015; [2] small scale on a global basis, and being in a fragmented industry with limited bargaining power; [3] concentrated customer base; and [4] seasonal cash flows. Our view also considers these strengths: [1] track record of consistent earnings, built on a cost pass-through model; [2] long-term customer relationships with global apparel brands, which provide solid short-term contractual revenue clarity; and [3] sound liquidity position, given cash on hand and committed working capital facilities. Our fundamental credit bias for Pan Brothers is "Positive", as the capacity expansion is half funded by the largest customer, which reduces the risk of idle capacity. In addition, the business model takes into account customers’ forecasts, with raw materials purchased only when orders have been confirmed. This reduces the risk associated with individual orders. We view the group as “Moderate” on the LAGA scale given the relatively wide ownership base, well experienced management, few related party transactions and the track record of the two families behind senior management. Our view also takes into account the lack of robust regulatory oversight, given the company is listed on the Jakarta exchange. Considering the weaker credit profile compared to Sritex, we believe the proposed USD 200 mn 5NC3 RegS Notes will price at 7.5% - 8%.

We view Pan Brothers as “High Risk” on the LARA scale. The company is a small garment manufacturer in the challenging textile industry, but is run by passionate managers/shareholders. Our assessment reflects risks associated with: [1] high financial leverage due to working capital build-up and capital investment, mitigated by an equity injection in 2015; [2] small scale on a global basis, and being in a fragmented industry with limited bargaining power; [3] concentrated customer base; and [4] seasonal cash flows.  Our view also considers these strengths: [1] track record of consistent earnings, built on a cost pass-through model; [2] long-term customer relationships with global apparel brands, which provide solid short-term contractual revenue clarity; and [3] sound liquidity position, given cash on hand and committed working capital facilities.  Our fundamental credit bias for Pan Brothers is "Positive", as the capacity expansion is half funded by the largest customer, which reduces the risk of idle capacity. In addition, the business model takes into account customers’ forecasts, with raw materials purchased only when orders have been confirmed. This reduces the risk associated with individual orders.  We view the group as “Moderate” on the LAGA scale given the relatively wide ownership base, well experienced management, few related party transactions and the track record of the two families behind senior management. Our view also takes into account the lack of robust regulatory oversight, given the company is listed on the Jakarta exchange.  Considering the weaker credit profile compared to Sritex, we believe the proposed USD 200 mn 5NC3 RegS Notes will price at 7.5% - 8%. 

Pan Brothers - New Issue Assessment - Lucror Analytics