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 Sritex as “High Risk” on the LARA scale. It has a short listing history, which limits visibility on its historical operating performance. In addition, the small company (compared to global peers) is rapidly expanding through acquisitions, which masks the quality of growth. We further note the weak working-capital management, and that capex has consistently exceeded guidance every year since we initiated coverage in 2014. The textile export market is highly competitive, with Bangladesh and Vietnam offering significantly lower labour costs. That said, Sritex has established a niche position, as demonstrated by increasing orders from repeat customers such as H&M, as well as orders for uniforms from the Indonesian, German and other NATO militaries. Our fundamental Credit Bias is "Stable", considering the continued improvement in business operations. The company has an adequate liquidity profile and a well-balanced debt maturity profile, after repurchasing part of its 2021 Notes in early 2019. We view Sritex as “Weak” on the LAGA scale, primarily on account of its: [1] inconsistent management guidance; [2] high level of related-party transactions and short track record as a listed company (since June 2013); [3] majority ownership (56%) and control by the Lukminto family; [4] very weak Board of Commissioners, due to the presence of two family members (out of three); and [5] substantial outside business interests of the founding family.

   We view Sritex as “High Risk” on the LARA scale. It has a short listing history, which limits visibility on its historical operating performance. In addition, the small company (compared to global peers) is rapidly expanding through acquisitions, which masks the quality of growth. We further note the weak working-capital management, and that capex has consistently exceeded guidance every year since we initiated coverage in 2014. The textile export market is highly competitive, with Bangladesh and Vietnam offering significantly lower labour costs. That said, Sritex has established a niche position, as demonstrated by increasing orders from repeat customers such as H&M, as well as orders for uniforms from the Indonesian, German and other NATO militaries.    Our fundamental Credit Bias is "Stable", considering the continued improvement in business operations. The company has an adequate liquidity profile and a well-balanced debt maturity profile, after repurchasing part of its 2021 Notes in early 2019.    We view Sritex as “Weak” on the LAGA scale, primarily on account of its: [1] inconsistent management guidance; [2] high level of related-party transactions and short track record as a listed company (since June 2013); [3] majority ownership (56%) and control by the Lukminto family; [4] very weak Board of Commissioners, due to the presence of two family members (out of three); and [5] substantial outside business interests of the founding family. 

Sri Rejeki Isman

Sritex - Tear Sheet - Lucror Analytics