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.

Credit

SJM Holdings' Q2/24 results were soft. The company reported flat GGR q-o-q (outpacing the industry's slight decline), supported by the continued ramp-up of GLP. This was partly offset by a weaker showing at GL. Positively, the drag from excess staff costs continued to shrink. In addition, management disclosed that SJM's market share grew further in July and August, which could support continued earnings outperformance in Q3. That said, there was little net debt reduction and the company's pace of deleveraging was slower than peers. Still, liquidity remains adequate, and we do not foresee material refinancing risks for the company.

  SJM Holdings' Q2/24 results were soft. The company reported flat GGR q-o-q (outpacing the industry's slight decline), supported by the continued ramp-up of GLP. This was partly offset by a weaker showing at GL. Positively, the drag from excess staff costs continued to shrink. In addition, management disclosed that SJM's market share grew further in July and August, which could support continued earnings outperformance in Q3.   That said, there was little net debt reduction and the company's pace of deleveraging was slower than peers. Still, liquidity remains adequate, and we do not foresee material refinancing risks for the company. 

SJM Holdings - Earnings Flash - H1 FY 2024 Results - Lucror Analytics

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-805'>SJM Holdings</a></li><li><a href='#lucror-entity-315'>Softbank Group</a></li><li><a href='#lucror-entity-384'>Yankuang Energy Group</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.SJM HoldingsSoftbank GroupYankuang Energy Group

Morning Views Asia: SJM Holdings, Softbank Group, Yankuang Energy Group

SJM Holdings has released Q4 and FY 2023 numbers that were mixed, in our view. The ramp-up of Grand Lisboa Palace (GLP) remained slow, with the asset's GGR increasing 11% q-o-q in Q4 (in line with industry growth). As a result, SJM’s market share from Q2 to Q4 remained stagnant at c. 12%. On a brighter note, GLP achieved EBITDA breakeven in Q4/23, with earnings likely to rise further in FY 2024 (on the back of broader industry growth). In addition, excess staff costs stemming from the late-2022 closure of satellite casinos continued to narrow. The EBITDA margin has recovered to the pre-pandemic level of 12%, thanks to improvement in the higher-margin mass gaming segment, albeit this was partly offset by the impact from excess staff costs. We expect SJM to generate slightly positive FCF in FY 2024 (vs. neutral FCF in Q4/23). That said, the company’s profitability should lag that of peers for the next 1-2 years, as it is unlikely that the costs associated with having excess gaming staff on the payroll will be fully resolved until 2025. This means that SJM’s pace of deleveraging may remain slower than peers.

  SJM Holdings has released Q4 and FY 2023 numbers that were mixed, in our view. The ramp-up of Grand Lisboa Palace (GLP) remained slow, with the asset's GGR increasing 11% q-o-q in Q4 (in line with industry growth). As a result, SJM’s market share from Q2 to Q4 remained stagnant at c. 12%.   On a brighter note, GLP achieved EBITDA breakeven in Q4/23, with earnings likely to rise further in FY 2024 (on the back of broader industry growth). In addition, excess staff costs stemming from the late-2022 closure of satellite casinos continued to narrow. The EBITDA margin has recovered to the pre-pandemic level of 12%, thanks to improvement in the higher-margin mass gaming segment, albeit this was partly offset by the impact from excess staff costs.   We expect SJM to generate slightly positive FCF in FY 2024 (vs. neutral FCF in Q4/23). That said, the company’s profitability should lag that of peers for the next 1-2 years, as it is unlikely that the costs associated with having excess gaming staff on the payroll will be fully resolved until 2025. This means that SJM’s pace of deleveraging may remain slower than peers. 

SJM Holdings - Earnings Flash - FY 2023 Results - Lucror Analytics

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Equity Bottom-Up

<ul>
<li>Although Hong Kong markets have slumped after Trump's election, mainland China's markets have gained.  Southbound net buying of HK stocks hit a 2024 high on the day Trump won.</li>
<li>
<a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a> had a breakout from a double top as Macau recorded good Golden Week arrivals.  <a href="https://www.smartkarma.com/entities/blue-moon-group-holdings" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (6993 HK)</a> had a breakout after 3 years.
</li>
<li>
<a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics (6185 HK)</a> formed a breakout after a new vaccine was approved and it reported better results.  <a href="https://www.smartkarma.com/entities/haidilao-international-holding" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao International Holding (6862 HK)</a> share price advanced as it expands stores.
</li>
</ul>


Although Hong Kong markets have slumped after Trump's election, mainland China's markets have gained.  Southbound net buying of HK stocks hit a 2024 high on the day Trump won.

Sands China (1928 HK) had a breakout from a double top as Macau recorded good Golden Week arrivals.  Blue Moon Group Holdings (6993 HK) had a breakout after 3 years.


CanSino Biologics (6185 HK) formed a breakout after a new vaccine was approved and it reported better results.  Haidilao International Holding (6862 HK) share price advanced as it expands stores.



Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 13)

Global Head of Research & Head of Europe, Lucror Analytics

Felix Fischer

Global Head of Research & Head of Europe

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.
In this Insight:
<ol>
<li><a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" rel="noopener">SK Hynix</a></li>
<li><a href="https://www.smartkarma.com/entities/adani-transmission-ltd" target="_blank" rel="noopener">Adani Transmission</a></li>
<li><a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" rel="noopener">Adani Green Energy</a></li>
<li><a href="https://www.smartkarma.com/entities/cifi-holdings-group-co-ltd" target="_blank" rel="noopener">CIFI Holdings</a></li>
<li><a href="https://www.smartkarma.com/entities/rakuten-group-inc" target="_blank" rel="noopener">Rakuten</a></li>
</ol>
and more...

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.
In this Insight:

SK Hynix
Adani Transmission
Adani Green Energy
CIFI Holdings
Rakuten

and more...

Hong Kong

SJM Holdings Limited offers amusement and recreation services.  The Company operates casinos, hotels, and other tourism-related facilities in Macau.

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SJM Holdings (880 HK)

SJM Holdings - Earnings Flash - H1 FY 2024 Results - Lucror Analytics

SJM Holdings' Q2/24 results were soft. The company reported flat GGR q-o-q (outpacing the industry's slight decline), supported by the continued...

Lucror Analytics

Morning Views Asia: SJM Holdings, Softbank Group, Yankuang Energy Group

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

SJM Holdings - Earnings Flash - FY 2023 Results - Lucror Analytics

SJM Holdings has released Q4 and FY 2023 numbers that were mixed, in our view. The ramp-up of Grand Lisboa Palace (GLP) remained slow, with the...

Lucror Analytics

Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 13)

Mainland China's A-share market advanced after Trump's election as South Connect buying hit a 3 year high. Sands China had a breakout as Macau...

David Mudd

Weekly Wrap - 25 Oct 2024

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and...

Lucror Analytics

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