reports
- Warut Promboon
Energy Absolute: Absolutely Negative Energy
Energy Absolute Public Company Limited (EA)’s negative headlines have gradually emerged since the beginning of the year. First, the Adder, which is fixed revenue per KWh from the Thai government, is expiring and the electric bus delivery has been below expectations. EA’s stock price has consistently underperformed the market in the past year, leading to market talk that insiders have sold the shares (EXHIBIT 1). Mr. Somphote Ahunai, the former CEO, subsequently admitted to the force sell of a sm...
- Warut Promboon
SPV77 / Siri Hub Investment Digital Token: Thailand’s First Debt Token
We are launching coverage of debt tokens with Siri Hub Investment Digital Tokens (SIRIHUB), Thailand’s first investment token. This report is a pre-launch report and we note that Thailand’s Securities Exchange Commission (SEC) is in the process of reviewing the launch at the time of this report. We understand XSpring Digital (formerly called SE Digital), SIRIHUB’s underwriter, has filed for SEC’s approval for the token launch since 5-May and the SEC has up to 90 days to assess the proposal. As s...
- Warut Promboon
Social Bonds: Here Come the Next Green Bonds
We initiate our coverage of Asian social bonds with a thematic report on (1) the current stage in the Asian capital markets, (2) social bond compliance regime, and (3) recent issuance in Asia. In subsequent months, we aim to launch a request for comment for our framework we will use to analyze social bond compliance with the Social Bond Principles (SBP).
- Warut Promboon
Thailand: The Baht Bond Bandwagon
We initiate our coverage of Thailand’s Thai Baht (THB)-denominated corporate bond market. In the report, we review the country’s THB bond market with a focus on corporate bonds, excluding commercial papers, in terms of market composition, participants (issuers & investors), and rating agencies. We also describe major hindering points for the development of the THB bond market and compare the THB bond market with Singapore’s SGD bond market where we see as the next milestone for the THB corporate...
- Warut Promboon
Lippo Malls Indonesia Retail Trust: Sponsoring the Sponsor
Since our 28-May initiation report on Lippo Malls Indonesia Retail Trust (LMIRT)’s two perpetual bonds (LMRTSP 6.6% and 7% Perpetual (in SGD)) and LMRTSP 7.25% 6/24 (in USD)) with an Underweight recommendation, the perpetuals underperformed while the senior bonds outperformed. LMRTSP 6/24 outperformance is not justified and we believe headline risk on potential rating downgrades, cashflow uncertainties, and the use of LMIRT to sustain its sponsor (PT Lippo Karawaci (Lippo)) by buying its asset...
- Warut Promboon
Thomson Medical Group: Medicated by Leverage
We initiate our coverage of Thomson Medical Group (TMG). The acquisition of Thomson Medical Centre (TMC) together with TMC Life Sciences Bhd (TMCLS) by Rowsley Ltd. in 1Q’18 has changed the fortune and checkered past of Rowsley, in our view. With the divestment of its loss-making real estate investments in January 2019 and name changed to TMG, TMG is now a pure healthcare play on a clean slate. TMG’s strength lies in TMC/TMLCS as one of Asia’s largest healthcare players with a focus in the Ob...
- Warut Promboon
NEPTUNE ORIENT LINES: Redemption Ahead of Iceberg
We initiate our coverage on Neptune Orient Line (NOL)’s SGD bonds with an OVERWEIGHT recommendation on NOLSP 4.65% 9/20s at 10.5% yield to maturity (YTM) at the time of this report, and an UNDERWEIGHT recommendation on NOLSP 4.4% 6/21s. Our recommendations are based on our expectation of NOL’s sufficient liquidity this year on modest deterioration in CMA CGM’s 1H’20 earnings (as a result of COVID-19). We question NOL’s liquidity beyond this year and do not recommend NOLSP 6/21s. The COVID-19 o...
- Warut Promboon
SRI LANKA: No Default This Year
In a series of two reports, we initiate our coverage of Sri Lanka as a high-yield sovereign credit. In this report, we review a number of factors on macroeconomic, political, and institutional fronts against the country’s Asian closest peers (Mongolia, Papua New Guinea, Tajikistan, Pakistan, and Iraq), in our judgment. We pointed out problems the country is facing, assessed the likelihood of the government defaulting on its external debt obligations, and gauged the possibility of the major ratin...
- Warut Promboon
Dr. Peng Telecom & Media Group: On Ventilator
Dr. Peng Telecom & Media Group Company Limited (Dr. Peng) is a guarantor of Dr. Peng Hong Kong Holding Limited, an issuer of USD500m bonds maturing 1st June 2020 (CHEDRP 5.05% 6/20s). This report focuses on the liquidity situation, and the maturity extension request. The company’s credit outlook over the next 12 months remains negative, in our view, given its weakening liquidity and the asset sale which we believe will increase execution risk and take away recurring revenue in the long run. ...
- Warut Promboon
Market Monitor: The Corona Carnage
Market was consolidating as the local outbreaks continue. We expect the worst (while hoping for the best). There are two uncertainties, in our view. First, we are no medical experts but believe only effective vaccines will stop this pandemic. There has been sporadic news on vaccine projects in addition to drug cocktails which were proven to work somehow. We understand it would take from 11-17 months minimum to produce vaccines for the mass...
- Warut Promboon
Market Monitor: A Corona Hangover
The year of rats brought us the elephant in the room, a new strain of Coronavirus (COVID-19) which is an ironic germ cousin of the black death (from rats in the 14th century). The virus has already infected and killed more people than SARS in 2003. All the leading indicators that we track (EXHIBIT 4) pointed to a decline in global trade activities. We expect Asian central banks to cut rates and offer fiscal stimulus (i.e. tax cuts and cash giveaways) to boost the economy. COVID-19 has somehow m...
- Warut Promboon
Security Token Journal: Debt Token as a Better Bond
This will be out of the ordinary that a fixed income analyst comments on cryptocurrency. We have been following tokenization for a while now even before the inception of Bondcritic in April of 2017. We feel 2020 is the time when security tokens could make the mark in the fixed income world. We see debt tokens as an improvement of a bond issuance process and expect regulators to gradually embrace them. In the future, we can see ourselves analysing debt tokens alongside bonds. In short, debt toke...
- Warut Promboon
361 Degrees International: Too Liquid to Quit
361 Degrees International (361)’s 1H’19 results confirm management’s intention to repurchase the bonds and reduce the company’s finance cost. The bond’s underperformance since the results came out on 26-Aug led us to review our recommendation. S&P and Fitch downgraded 361’s senior unsecured debt rating to BB- from BB in March on weakening operating cashflow and competitive position in China’s sport footwear and apparel industry. 1H’19 results and the bond repurchase show us management has the in...
- Warut Promboon
Huawei Investment & Holding– In the Eye of the Storm (Part I)
The HUAWEI complex (HUAWEI 22s, 25s, 26s, and 27s), all guaranteed by Huawei, has dropped 2-3 points across the board to the mid 90 cents on a dollar since 17-May when the first news of Google’s ban broke. We expect more negative news on Huawei this year and expect asymmetric downside risk on the bonds. The fact that Google issued a statement on 20-May to continue its business with Huawei leads us to believe the dust has not settled. That said, we put our recommendation on all HUAWEI complex und...
China Evergrande Group: The case of rising leverage and lower profit m...
Having paid dividends of RMB 27.7bn in 2018, noteholders must have been relieved when China Evergrande Group (“Evergrande” or the “Group”) did not recommend a final dividend for the year ended 31 December 2018. But they were unable to avert the cardiac arrest that was about to follow. After issuing USD 3.0bn of senior notes in January, Evergrande issued another USD 3.0bn in April. The Chinese property market has been showing signs of decline, or at the very least, slowing growth, depending on w...
- Umesh Desai
- Warut Promboon
- Warut Promboon
- Warut Promboon
The Pad Thai Election
We expect the upcoming March 24th general election in Thailand to be the first step toward a check-and-balance system but also see this election leading to another election in 2-3 years with the current poll pointing to either an indecisive faction with the junta’s leader, General Prayut Chan O-Sha as the Prime Minister (PM) or a loose faction with Abhisit Vejjajiva as the PM. In either case, we do not expect the new government to have the decisive vote in the parliament. With all the campaig...
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