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 Soechi Lines as “High Risk” on the LARA scale. This reflects risks associated with: [1] the new shipyard business, which was started in 2010 and has high operational risks, with reported delays in deliveries, no new contracts and weak cash flows (the company typically receives the bulk of payment only upon delivery); and [2] the high capex nature of the shipping business for acquiring new vessels. Thus, Soechi is unlikely to generate meaningful FCF while it continues to grow. The key risk is the continued delays in deliveries, along with vessel breakdowns. We note the company's position as the second largest tanker and product vessel owner/operator in Indonesia, behind state-owned Pertamina (rated Baa3/BBB), which is also Soechi’s largest customer. Soechi has a dependence on Pertamina, which accounts for half of revenue. This customer concentration is mitigated by their four-decade-long and symbiotic relationship. Most of the shipping business is based on time charters with long remaining life (c. 4.5 years), which provides stability and cash flow visibility. Our Credit Bias is “Negative”, due to operational issues such as delays in deliveries and the weak cash flow of the new shipyard business, which offset the shipping business' stability. We view Soechi’s corporate governance as “Weak”. This is on account of the company's family-run nature, with the Utomo family holding an 85% stake, and material ongoing related-party transactions. That said, we note that the family is well-regarded in the industry. We see fair value for the SOCIIJ '24s at 7.6-7.9%.

We view Soechi Lines as “High Risk” on the LARA scale. This reflects risks associated with: [1] the new shipyard business, which was started in 2010 and has high operational risks, with reported delays in deliveries, no new contracts and weak cash flows (the company typically receives the bulk of payment only upon delivery); and [2] the high capex nature of the shipping business for acquiring new vessels. Thus, Soechi is unlikely to generate meaningful FCF while it continues to grow. The key risk is the continued delays in deliveries, along with vessel breakdowns.  We note the company's position as the second largest tanker and product vessel owner/operator in Indonesia, behind state-owned Pertamina (rated Baa3/BBB), which is also Soechi’s largest customer. Soechi has a dependence on Pertamina, which accounts for half of revenue. This customer concentration is mitigated by their four-decade-long and symbiotic relationship. Most of the shipping business is based on time charters with long remaining life (c. 4.5 years), which provides stability and cash flow visibility.  Our Credit Bias is “Negative”, due to operational issues such as delays in deliveries and the weak cash flow of the new shipyard business, which offset the shipping business' stability.  We view Soechi’s corporate governance as “Weak”. This is on account of the company's family-run nature, with the Utomo family holding an 85% stake, and material ongoing related-party transactions. That said, we note that the family is well-regarded in the industry.  We see fair value for the SOCIIJ '24s at 7.6-7.9%. 

Soechi Lines - New Issue Assessment - Lucror Analytics