Daily Brief Credit: Asia HY Monthly – June 2023 – Lucror Analytics and more

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

China South City’s (CSC) FY 2022-23 results were as weak as expected. Revenue decreased 58% y-o-y to HKD 4.1 bn, with property sales declining 65% to HKD 2.4 bn and recurring income down 26% to HKD 1.7 bn. Earnings-based credit metrics deteriorated substantially, as adjusted EBITDA turned negative. Liquidity stood at a very weak 16% at end-March 2023, while Net Debt/Net Property Assets was sound at 39%, thanks to CSC’s sizeable investment property portfolio.

Given the sustained weakness in CSC’s property sales, we do not expect the company to be able to generate adequate FCF organically. We believe asset disposals will remain key to debt repayment. CSC has been leveraging its new state ties by selling key assets to its SOE parent and accessing more onshore bank funding. Therefore, we maintain our “Hold” recommendation on the CSCHCN curve.

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.

• Country Garden Holdings Co
• First Pacific Co