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 Tunas Baru Lampung (TBLA) as “High Risk” on the LARA scale. This reflects the risks associated with its: [1] limited scale and geographically concentrated operations; [2] volatile working capital and CFO, partly on account of the uncertainty over import quotas for raw sugar; [3] weak FCF generation, due to persistently higher than expected capex; [4] moderately weak financial profile, with elevated leverage; and [5] poor liquidity, as the company is dependent on banks' willingness to refinance its short-term loans. These are balanced against the company’s low plantation cash costs and vertically integrated business model, which reduce its exposure to cyclical crude palm oil prices. In addition, TBLA's margins and earnings appear resilient, thanks to the vertical integration and its production of non-discretionary household goods. While TBLA has a questionable environmental record, we believe the financial risks are mitigated by the company’s domestic-focused business model. Our fundamental Credit Bias on TBLA is “Negative”, owing to the company’s working capital volatility and high capex. These have resulted in negative FCF generation since FY 2016, and have kept the company's leverage elevated. We view TBLA's corporate governance as “Weak” on the LAGA scale. This takes into account the effective control of the company by Widarto and Santoso Winata (combined ownership of 55%), the company's questionable environmental record, as well as concerns over the effectiveness of the Boards of Commissioners and Directors, given the presence of family members on both Boards. Moreover, there are significant related-party transactions.

   We view Tunas Baru Lampung (TBLA) as “High Risk” on the LARA scale. This reflects the risks associated with its: [1] limited scale and geographically concentrated operations; [2] volatile working capital and CFO, partly on account of the uncertainty over import quotas for raw sugar; [3] weak FCF generation, due to persistently higher than expected capex; [4] moderately weak financial profile, with elevated leverage; and [5] poor liquidity, as the company is dependent on banks' willingness to refinance its short-term loans.    These are balanced against the company’s low plantation cash costs and vertically integrated business model, which reduce its exposure to cyclical crude palm oil prices. In addition, TBLA's margins and earnings appear resilient, thanks to the vertical integration and its production of non-discretionary household goods. While TBLA has a questionable environmental record, we believe the financial risks are mitigated by the company’s domestic-focused business model.    Our fundamental Credit Bias on TBLA is “Negative”, owing to the company’s working capital volatility and high capex. These have resulted in negative FCF generation since FY 2016, and have kept the company's leverage elevated.    We view TBLA's corporate governance as “Weak” on the LAGA scale. This takes into account the effective control of the company by Widarto and Santoso Winata (combined ownership of 55%), the company's questionable environmental record, as well as concerns over the effectiveness of the Boards of Commissioners and Directors, given the presence of family members on both Boards. Moreover, there are significant related-party transactions. 

Tunas Baru - Tear Sheet - Lucror Analytics