Senior Credit Analyst, Lucror Analytics

Trung Nguyen

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

<p><br />  Tata Steel’s Q2/18-19 results were strong, with gains in both revenue and profitability thanks to the favourable operating environment. The financial risk profile, however, was merely stable, owing to the large amount of debt incurred for the Bhushan acquisition. The deal also impacted liquidity, which is now weak.<br /><br />  We anticipate that the company’s credit profile will improve significantly in H2/18-19, thanks to the contributions from, and ramp-up of, Bhushan Steel. The one-time increase in debt to fund the deal has driven a spike in leverage, and additional earnings will take some time to flow though. Positively, Bhushan seems to be doing well, having reported strong q-o-q surges in revenue and profitability.<br /><br />  Our fundamental Credit Bias on Tata Steel remains “Stable”, as debt-funded acquisitions may offset the positive effects of the JV with Thyssenkrupp.<br /><br />  We maintain our "Buy" recommendation on the TATAIN '28s, which were last quoted at 86.75/87.75, yielding 7.5%/7.3%. </p>

   Tata Steel’s Q2/18-19 results were strong, with gains in both revenue and profitability thanks to the favourable operating environment. The financial risk profile, however, was merely stable, owing to the large amount of debt incurred for the Bhushan acquisition. The deal also impacted liquidity, which is now weak.    We anticipate that the company’s credit profile will improve significantly in H2/18-19, thanks to the contributions from, and ramp-up of, Bhushan Steel. The one-time increase in debt to fund the deal has driven a spike in leverage, and additional earnings will take some time to flow though. Positively, Bhushan seems to be doing well, having reported strong q-o-q surges in revenue and profitability.    Our fundamental Credit Bias on Tata Steel remains “Stable”, as debt-funded acquisitions may offset the positive effects of the JV with Thyssenkrupp.    We maintain our "Buy" recommendation on the TATAIN '28s, which were last quoted at 86.75/87.75, yielding 7.5%/7.3%. 

Tata Steel - Earnings Flash - Q2 FY 2018-19 Results - Lucror Analytics

Leonard Law, CFA

<p><br />  In this month’s “In-Focus” section, we discuss Corporate Governance in Chinese Companies. Specifically, we highlight: [1] the nascent development of the Chinese corporate governance regime; [2] the lack of strong external examination/review; [3] different types of Chinese public companies; and [4] Lucror’s approach to assessing corporate governance.<br /><br />  The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the "In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. </p>

   In this month’s “In-Focus” section, we discuss Corporate Governance in Chinese Companies. Specifically, we highlight: [1] the nascent development of the Chinese corporate governance regime; [2] the lack of strong external examination/review; [3] different types of Chinese public companies; and [4] Lucror’s approach to assessing corporate governance.    The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the "In-Focus” section. The Asia Monthly is intended to broaden investors' understanding of the Asian USD high-yield market. 

Asia HY Monthly - Corporate Governance In Chinese Companies - Lucror Analytics

Equity Analyst

Gihan Bandara

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

<p>The Reserve Bank of India published a list of companies that has a collective outstanding debt value of around INR2,000bn during 2017. This list includes 12 major companies that account for 20% of the current NPAs of the Indian banking system, out of these, 5 are steel manufacturers (Bhushan Steel, Bhushan Power, Monnet Ispat, Electrosteel and Essar Steel). The cumulative steel production capacity of these five companies are around 23 MTPA. Accordingly, these companies account for around 25% of…</p>

The Reserve Bank of India published a list of companies that has a collective outstanding debt value of around INR2,000bn during 2017. This list includes 12 major companies that account for 20% of the current NPAs of the Indian banking system, out of these, 5 are steel manufacturers (Bhushan Steel, Bhushan Power, Monnet Ispat, Electrosteel and Essar Steel). The cumulative steel production capacity of these five companies are around 23 MTPA. Accordingly, these companies account for around 25% of…

TATA Steel Could Retake Capacity Crown as 20% of Indian Steel Capacity up for Grabs

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

<div class="content-highlight">
<h2><strong>Executive summary</strong></h2>
</div>
<p><a href="https://www.smartkarma.com/entities/20934" target="_blank" data-smartkarma-citation="entities:20934:1">Tata Steel Ltd (TATA IN)</a> (“TSL”)’s FY18 revenue improved on rising production volume in Indian operations which accounted for 46% of overall revenue in FY18 but contributed around 79% of overall EBITDA. (See FY18 financial update section). Net proceeds of INR91bn from the rights issue in March 2018, resulted in improvement in the debt-to-EBITDA multiple to 4.5x from 4.9x a year ago. We note that the ratio remains a lot higher than Moody’s median debt-to-EBITDA multiple of…</p>


Executive summary

Tata Steel Ltd (TATA IN) (“TSL”)’s FY18 revenue improved on rising production volume in Indian operations which accounted for 46% of overall revenue in FY18 but contributed around 79% of overall EBITDA. (See FY18 financial update section). Net proceeds of INR91bn from the rights issue in March 2018, resulted in improvement in the debt-to-EBITDA multiple to 4.5x from 4.9x a year ago. We note that the ratio remains a lot higher than Moody’s median debt-to-EBITDA multiple of…

Equity Analyst, LightStream Research

Chacko Jacob

Thematic (Sector/Industry)

<p>The wait for Essar Steel’s lenders only got longer as the Consortium of Creditors that replaced its board rejected bids from Numetal and <a href="https://www.smartkarma.com/entities/21125" target="_blank" data-smartkarma-citation="entities:21125:1">ArcelorMittal (MT NA)</a> after finding them ineligible under revised bankruptcy laws. Essar Steel owes over INR 450bn to its lenders comprising about 22 banks. We take a quick look at the Company and the potential bidders in round two.</p><h2><strong>The Background</strong></h2><p>Essar Steel is an integrated steel producer with an annual capacity of 10MT that was established by the Ruia family…</p>

The wait for Essar Steel’s lenders only got longer as the Consortium of Creditors that replaced its board rejected bids from Numetal and ArcelorMittal (MT NA) after finding them ineligible under revised bankruptcy laws. Essar Steel owes over INR 450bn to its lenders comprising about 22 banks. We take a quick look at the Company and the potential bidders in round two.The BackgroundEssar Steel is an integrated steel producer with an annual capacity of 10MT that was established by the Ruia family…

Essar Steel: Liquidation Looms Large as Bidding Forced into Round Two

India

Tata Steel Ltd. is an integrated steel producer which manufactures a variety of steel products. The Company's products include steel ball bearing rings, alloy steel bearing rings, annular forgings, flanges, bearings, welded steel tubes, cold rolled strips and seamless tubes. Tata Steel also manufactures metallurgical machinery.

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Tata Steel Ltd (TATA IN)

Tata Steel - Earnings Flash - Q2 FY 2018-19 Results - Lucror Analytics

Tata Steel’s Q2/18-19 results were strong, with gains in both revenue and profitability thanks to the favourable operating environment. The...

Lucror Analytics

Asia HY Monthly - Corporate Governance In Chinese Companies - Lucror Analytics

In this month’s “In-Focus” section, we discuss Corporate Governance in Chinese Companies. Specifically, we highlight: [1] the nascent development...

Lucror Analytics

TATA Steel Could Retake Capacity Crown as 20% of Indian Steel Capacity up for Grabs

The Reserve Bank of India published a list of companies that has a collective outstanding debt value of around INR2,000bn during 2017. This list...

Gihan Bandara

Tata Steel: Lingering "Debt" Weight.

Executive summary Tata Steel Ltd (TATA IN) (“TSL”)’s FY18 revenue improved on rising production volume in Indian operations which accounted for...

Bondcritic

Essar Steel: Liquidation Looms Large as Bidding Forced into Round Two

The wait for Essar Steel’s lenders only got longer as the Consortium of Creditors that replaced its board rejected bids from Numetal and...

Chacko Jacob

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