Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

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.

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view Liberty Costa Rica’s ESG as “Adequate”. The score mirrors our assessment of parent Liberty Latin America (LLA), which discloses ESG-related information on a consolidated basis, without meaningful details on the bond-issuing credit pools that we cover (C&amp;W Communications and Liberty Puerto Rico).  We assess LLA’s Social and Governance pillars as “Strong” and “Adequate”, respectively, offsetting the “Weak” Environmental score. Controversies are “Immaterial” and Disclosure is “Adequate”.

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view Liberty Costa Rica’s ESG as “Adequate”. The score mirrors our assessment of parent Liberty Latin America (LLA), which discloses ESG-related information on a consolidated basis, without meaningful details on the bond-issuing credit pools that we cover (C&amp;W Communications and Liberty Puerto Rico).   We assess LLA’s Social and Governance pillars as “Strong” and “Adequate”, respectively, offsetting the “Weak” Environmental score. Controversies are “Immaterial” and Disclosure is “Adequate”. 

Liberty Costa Rica - ESG Report - Lucror Analytics

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Telenet has announced the publication of the prospectus. The Board of Directors of Telenet has prepared a response memorandum in which it sets out its recommendation of the Offer.</li>
<li>The offer is opportunistic and optically generous, with neither interloper risk nor sweetening to be expected. I believe most investors will cash out. Liberty could eventually drop the acceptance threshold.</li>
<li>Given the ambiguity surrounding both the company and the sector in Belgium, I still think Liberty might acquire Telenet for almost a bargain. Spread is 2.38%/19.8% (gross/annualised).</li>
</ul>


Telenet has announced the publication of the prospectus. The Board of Directors of Telenet has prepared a response memorandum in which it sets out its recommendation of the Offer.
The offer is opportunistic and optically generous, with neither interloper risk nor sweetening to be expected. I believe most investors will cash out. Liberty could eventually drop the acceptance threshold.
Given the ambiguity surrounding both the company and the sector in Belgium, I still think Liberty might acquire Telenet for almost a bargain. Spread is 2.38%/19.8% (gross/annualised).


Liberty/​Telenet: Opening of Acceptance Period

<ul>
<li>Liberty intends to launch an offer to acquire the minorities in its subsidiary Telenet, taking advantage of the drop in the share price over the last two years.</li>
<li>Liberty offers €22/share in cash, cum dividend, 5.9x EV/Fwd EBITDA, a minimum 95% threshold and no MAC with respect to BEL-20 index and shares of Telenet peers prior results announcement.</li>
<li>My fair value estimate (DCF based) is €16.2, i.e. 26% downside to the intended offer price. Spread is 5.2%/15.6% (gross/annualised). Cautious long.</li>
</ul>


Liberty intends to launch an offer to acquire the minorities in its subsidiary Telenet, taking advantage of the drop in the share price over the last two years.
Liberty offers €22/share in cash, cum dividend, 5.9x EV/Fwd EBITDA, a minimum 95% threshold and no MAC with respect to BEL-20 index and shares of Telenet peers prior results announcement.
My fair value estimate (DCF based) is €16.2, i.e. 26% downside to the intended offer price. Spread is 5.2%/15.6% (gross/annualised). Cautious long.


Liberty/Telenet: Intended Offer for Minorities

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Communication Services Select Sector SPDR Fund / Technical Analysis

Communication Services Select Sector SPDR Fund

<ul>
<li>In our January 10th Compass, we discussed a break above 3910 on SPX would signal a tradable rally, with 4100-4165 our target, the top-end of our expected 2023 trading range.</li>
<li>We believe equities are still in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the 4100-4165 area.</li>
<li>After being underweight Communications (XLC) since Nov 2021, sidestepping 20% underperformance vs. SPX, we now see signs of price and RS bottoms, and we are upgrading to market weight. Buy.</li>
</ul>


In our January 10th Compass, we discussed a break above 3910 on SPX would signal a tradable rally, with 4100-4165 our target, the top-end of our expected 2023 trading range.
We believe equities are still in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the 4100-4165 area.
After being underweight Communications (XLC) since Nov 2021, sidestepping 20% underperformance vs. SPX, we now see signs of price and RS bottoms, and we are upgrading to market weight. Buy.


Upgrading Communications, Downgrading Staples - Both to Market Weight; US Dollar Major Top

Quality-Value Investing

Marc Melendez, CFA

Emerging Market Small and Mid Cap Equities

Reperio Capital

Reperio Capital Research was founded in 2013 with the goal of better serving the investment community with in-depth, high quality, value oriented research.

Reperio means to discover in latin. Using value investing principles, we aim to discover a minimum of 12 investment opportunities per year within the Emerging Markets Small and Mid Cap universe.

We take a business owners perspective with a long term investment horizon. We conduct bottom up, fundamental research. We focus on downside risks and require a significant margin of safety in any investment to prevent the permanent loss of capital. All factors differentiating our research from the short term, trading focus of traditional research providers.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/link-net-tbk-pt" target="_blank" data-smartkarma-citation="entities:1050:1" rel="noopener">Link Net (LINK IJ)</a> is a broadband and cable TV provider in Indonesia. It is undervalued under all scenarios with 54% upside to the 2021 fair value per share in bear case and 143% upside to the 2021 fair valuer per share in the base case.The company recently embarked on a new subscriber growth strategy, which so far has been successful. Over the past two quarters, Link Net added an average of 58,154 new subscribers per quarter. Over the previous five years, the average quarterly rate of new subscribers was 12,232. ARPU fell with the subscriber growth, but it seems to be stabilizing.In addition to the new subscriber growth strategy, the company is an efficient operator with a five-year average ROIC of 24%. It also regularly buys back shares when it thinks the company is undervalued. Since IPO in 2014, 9.6% of shares issued have been repurchased with most being canceled.The company also has room to increase the amount of debt in its capital structure. At 3 times EBITDA, Link Net could raise debt by IDR5.5 trillion, which is just below its current market cap of IDR6 trillion.Trading on a EV/TTM EBIT of 5.8 times, Link Net is attractive at current valuations.

Link Net (LINK IJ) is a broadband and cable TV provider in Indonesia. It is undervalued under all scenarios with 54% upside to the 2021 fair value per share in bear case and 143% upside to the 2021 fair valuer per share in the base case.The company recently embarked on a new subscriber growth strategy, which so far has been successful. Over the past two quarters, Link Net added an average of 58,154 new subscribers per quarter. Over the previous five years, the average quarterly rate of new subscribers was 12,232. ARPU fell with the subscriber growth, but it seems to be stabilizing.In addition to the new subscriber growth strategy, the company is an efficient operator with a five-year average ROIC of 24%. It also regularly buys back shares when it thinks the company is undervalued. Since IPO in 2014, 9.6% of shares issued have been repurchased with most being canceled.The company also has room to increase the amount of debt in its capital structure. At 3 times EBITDA, Link Net could raise debt by IDR5.5 trillion, which is just below its current market cap of IDR6 trillion.Trading on a EV/TTM EBIT of 5.8 times, Link Net is attractive at current valuations.

Link Net (LINK:IJ)- New Subscriber Growth Strategy Working. The Company Is Undervalued.

United States

Liberty Latin America Ltd. operates as a telecommunication company. The Company offers video, broadband Internet, telephony, and mobile services. Liberty Latin America also delivers entertainment services. Liberty Latin America serves customers in Chile, Puerto Rico, the Caribbean, and Latin America.

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Liberty Latin America (LILA US)

Liberty Costa Rica - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view Liberty Costa Rica’s ESG as...

Lucror Analytics

Liberty/Telenet: Opening of Acceptance Period

On 7 June, Telenet announced the publication of the prospectus. The Board of Directors of Telenet has prepared a response memorandum in which it...

Jesus Rodriguez Aguilar

Liberty/Telenet: Intended Offer for Minorities

Liberty offers €22/share in cash, cum dividend, 59% premium, 5.9x EV/Fwd EBITDA, with conditions: a minimum 95% threshold and no MAC with respect...

Jesus Rodriguez Aguilar

Upgrading Communications, Downgrading Staples - Both to Market Weight; US Dollar Major Top

We believe equities are still in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the $SPX 4100-4165 area. Upgrading...

Vermilion Research

Link Net (LINK:IJ)- New Subscriber Growth Strategy Working. The Company Is Undervalued.

Link Net is a growing, efficient cable operator that recently embarked on a new subscriber growth strategy. It is undervalued under all scenarios...

Reperio Capital

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52-week Range

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Liberty Costa Rica - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We view Liberty Costa Rica’s ESG as...

Lucror Analytics

Liberty/​Telenet: Opening of Acceptance Period

On 7 June, Telenet announced the publication of the prospectus. The Board of Directors of Telenet has prepared a response memorandum in which it...

Jesus Rodriguez Aguilar

Liberty/Telenet: Intended Offer for Minorities

Liberty offers €22/share in cash, cum dividend, 59% premium, 5.9x EV/Fwd EBITDA, with conditions: a minimum 95% threshold and no MAC with respect...

Jesus Rodriguez Aguilar

Upgrading Communications, Downgrading Staples - Both to Market Weight; US Dollar Major Top

We believe equities are still in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the $SPX 4100-4165 area. Upgrading...

Vermilion Research

Link Net (LINK:IJ)- New Subscriber Growth Strategy Working. The Company Is Undervalued.

Link Net is a growing, efficient cable operator that recently embarked on a new subscriber growth strategy. It is undervalued under all scenarios...

Reperio Capital

Liberty/Telenet: Opening of Acceptance Period