Daily Brief Credit: H&H International – Earnings Flash – H1 FY 2022 Results – Lucror Analytics and more

H&H International’s H1/22 results were adequate in our view, despite the challenging operating conditions in China. The company is gradually diversifying its businesses, with ANC and PNC accounting for 48% of total H1/22 revenue. Moreover, demand for PNC products is increasing, and H&H is focused on leveraging this to expand in the US and China. The Swiss brand under ANC is also growing steadily. Going forward, these would allow the company to balance any revenue decline from the intensified BNC business. H&H has a moderate financial risk profile overall, with sound liquidity.

West China Cement’s H1/22 results were in line with expectations. The company reported broad sales volume declines across all regions in China, owing to pandemic-related disruptions. Still, its revenue and gross margin were largely stable, as the better-than-expected ASP growth was able to offset increases in coal and electricity costs. Moreover, the FCF deficit was smaller than anticipated, as capex fell y-o-y. Net Debt/EBITDA weakened slightly, but remained strong at 1.8x (FYE 2021: 1.6x). Management anticipates more meaningful earnings growth and margin expansion in FY 2023, supported by the contribution from its new plant in Congo (expected to commence at end-2022).

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.

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