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.

High Yield Experts

Credit Analyst, Lucror Analytics

Chuanyi Zhou

Credit Analyst

Credit

We view China Evergrande as “High Risk” on the LARA scale. The company's financial risk profile is highly leveraged. Evergrande has been growing at an extraordinary pace, utilising debt for funding, though it now plans to slow its expansion and deleverage. The company’s core development business has the following strengths: [1] predictable revenue growth, backed by adequate saleable resources; [2] largest presence and sales network in China; and [3] mass-market products targeting first-time home buyers. These advantages are partly offset by the company's debt-funded growth, increasing land cost, and aggressive financial policies. Our Credit Bias on Evergrande is “Negative”, due to its soft revenue growth, weak margins, increasing debt and poor liquidity. Evergrande's contracted sales have been growing despite the COVID-19 pandemic, thanks to its strong online sales platform. That said, the company is facing refinancing and liquidity pressure. Revenue could continue to be soft, due both to construction disruptions on account of the outbreak, as well as the company's limited resources to support property delivery. We remain cautious about the debt-like nature of the strategic investments in the onshore subsidiary and the cash-burning nature of the new-energy vehicle business. The declaration of a FY 2019 dividend may signal a halt with respect to the back-door listing, which could in turn trigger the exercise of put options by the strategic investors in January 2021. We view the group as “Weak” on the LAGA scale, owing to the Chairman's dominance of the Board, and the company's continued investments in non-core businesses.

  We view China Evergrande as “High Risk” on the LARA scale. The company's financial risk profile is highly leveraged. Evergrande has been growing at an extraordinary pace, utilising debt for funding, though it now plans to slow its expansion and deleverage. The company’s core development business has the following strengths: [1] predictable revenue growth, backed by adequate saleable resources; [2] largest presence and sales network in China; and [3] mass-market products targeting first-time home buyers. These advantages are partly offset by the company's debt-funded growth, increasing land cost, and aggressive financial policies.   Our Credit Bias on Evergrande is “Negative”, due to its soft revenue growth, weak margins, increasing debt and poor liquidity. Evergrande's contracted sales have been growing despite the COVID-19 pandemic, thanks to its strong online sales platform. That said, the company is facing refinancing and liquidity pressure. Revenue could continue to be soft, due both to construction disruptions on account of the outbreak, as well as the company's limited resources to support property delivery. We remain cautious about the debt-like nature of the strategic investments in the onshore subsidiary and the cash-burning nature of the new-energy vehicle business. The declaration of a FY 2019 dividend may signal a halt with respect to the back-door listing, which could in turn trigger the exercise of put options by the strategic investors in January 2021.   We view the group as “Weak” on the LAGA scale, owing to the Chairman's dominance of the Board, and the company's continued investments in non-core businesses. 

China Evergrande - Tear Sheet - Lucror Analytics