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 West China Cement (WCC) as "Medium Risk" on the LARA scale. The company has a leading market position in Shaanxi in China, as well as a small but expanding presence in Xinjiang and Guizhou. It also has a plant in Mozambique, which commenced operations in December 2020. The cement industry in Shaanxi has favourable supply/demand dynamics, as producers have been able to coordinate production cuts to boost ASP despite overcapacity. That said, there could be event risks related to WCC's expansion plans, particularly in Africa (where industry trends are less well-understood). Moreover, the company may be exposed to geopolitical and execution risks in frontier markets. Our fundamental Credit Bias on WCC is "Stable", on account of its strong OCF and still-healthy leverage. That said, we believe leverage will weaken in FY 2022 and FY 2023 before recovering, given the company's plans for continued investments in Africa. Moreover, WCC's new plants in Africa would require time to ramp up before they can generate meaningful earnings. Controversies are "Immaterial". We note that cement production is a major source of carbon emissions. According to IEA, the cement industry contributes 7% of global CO2 emissions and is the second-largest industrial emitter (behind the iron and steel industry). That said, there is a lack of suitable alternatives for cement as an input of concrete. Moreover, WCC's main markets (China and Africa) will likely remain heavily dependent on cement for infrastructure developments. Hence, we assess the ESG Impact on Credit as "Neutral".

  We view West China Cement (WCC) as "Medium Risk" on the LARA scale. The company has a leading market position in Shaanxi in China, as well as a small but expanding presence in Xinjiang and Guizhou. It also has a plant in Mozambique, which commenced operations in December 2020. The cement industry in Shaanxi has favourable supply/demand dynamics, as producers have been able to coordinate production cuts to boost ASP despite overcapacity. That said, there could be event risks related to WCC's expansion plans, particularly in Africa (where industry trends are less well-understood). Moreover, the company may be exposed to geopolitical and execution risks in frontier markets.   Our fundamental Credit Bias on WCC is "Stable", on account of its strong OCF and still-healthy leverage. That said, we believe leverage will weaken in FY 2022 and FY 2023 before recovering, given the company's plans for continued investments in Africa. Moreover, WCC's new plants in Africa would require time to ramp up before they can generate meaningful earnings.   Controversies are "Immaterial". We note that cement production is a major source of carbon emissions. According to IEA, the cement industry contributes 7% of global CO2 emissions and is the second-largest industrial emitter (behind the iron and steel industry). That said, there is a lack of suitable alternatives for cement as an input of concrete. Moreover, WCC's main markets (China and Africa) will likely remain heavily dependent on cement for infrastructure developments. Hence, we assess the ESG Impact on Credit as "Neutral".  

West China Cement - Tear Sheet - Lucror Analytics