1、Asia Corporate Credit 7 May 2010 Asia Credit Weekly All eyes on Greece Deutsche Bank AG/Hong Kong All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from
2、 Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as o
3、nly a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 106/05/2009 Market Update Research Team Martin Hohensee Strategist (+65 ) 64236032 Gene Cheon Research Analyst (+65) 64236967 Devinda Paranathanthri Research Analyst (
4、+65) 64235718 Mathura Yogarajah Research Analyst (+65) 6 423-5721 Marie-Anne Garcia Research Analyst (+65) 6 423 5726 marie-anne- Credit Global Markets Research Corporate Credit Concerns regarding the Greece and contagion to other parts of the world continued to drag the investor sentiment, despit
5、e the announcement of details on the Greece rescue package earlier this week. We expect that by Monday, Europe will have voted to approve the bailout package for Greece, buying welcome breathing space. Taking this assumptions we see the coming week as a risk taking opportunity, but still have a stro
6、ng bias towards very liquid instruments, those where we see reasonable support from current levels of distress, and/or trades that offer an interesting opportunity to put on longer-term risk that should work well. In the sovereign space, we think the current spread between INDON and PHILIP 5Y CDS re
7、presents a good entry level to sell INDON and buy PHILIP CDS. Elsewhere, corporate investors should look for defensive names with solid credit fundamentals such as TRECN14, ADAIND19, AGILE17, TRUE13 however, on the former, we expect that by Monday Europe will have voted to approve the bailout packag
8、e for Greece, buying welcome breathing space. Furthermore, our impression is that the protests in Greece, which will surely continue to grab attention, will not give an accurate reflection of the broader populations acceptance that painful reforms are a better choice than the alternative. At the tim
9、e of writing, these arent easy calls, but taking these assumptions we expect a recovery in risky asset prices next week on at least a modest scale. Thereafter we assume for now that the resolution of the broader European problem can take place at a more reasonable pace. On a tactical basis we see th
10、e coming week as a risk taking opportunity, but still have a strong bias towards very liquid instruments, those where we see reasonable support from current levels of distress, and/or trades that offer an interesting opportunity to put on longer-term risk that should work well. Below we will conside
11、r a few such ideas. CREDIT Indonesia was among the biggest underperformers in sovereign credit as well, presumably because of its increased dependence on foreign capital to fund its deficit. We have long held the view that Indonesia is in the process of a gradual upgrade cycle, and despite the slowi
12、ng of reforms since the BCA scandal and Finance Minister Sri Mulyanis decision to move on to the World Bank, we maintain this view. And in the context of Indonesias ability to fund the remaining fiscal deficit we understand that it still has in excess of $5bn in undrawn credit lines with multilatera
13、l creditors that it secured during the credit crisis. This should mitigate tail 7 May 2010 Corporate Credit Asia Credit Weekly Page 4 Deutsche Bank AG/Hong Kong risks where its financing is concerned. On that basis, we would treat the backup in Indonesia credit as an opportunity to buy into the long
14、er term credit story. On the other hand, in the Philippines the budget deficit for Q1 (P134bn) vastly overshot the target (P111bn), and last years deficit (P119bn). S&P and Fitch left the Philippines after their annual review calling for fiscal reforms from the next government to replace legislated
15、deterioration in fiscal accounts over the past two years. Neither granted requests for an upgrade. On the technical front, offshore issuance has been heavier than planned this year. The BTr issued $500mn of retail bonds targeting offshore foreign workers in March and April, and said shortly thereaft
16、er that would be interested in raising another $500mn later this year. The Treasurer has also said that they are interested in borrowing in the EUR market when market conditions are right. Finally, following the release of the fiscal overshoot, the Treasury conceded that they could wind up issuing m
17、ore into the external debt market if the deficit overshoots. Separately PSALM plans to sell $1bn this month without a government guarantee. We think the current spread between INDON and PHILIP 5Y CDS represents a good entry level to sell INDON and buy PHILIP CDS. Figure 4: 5Y CDS: INDON minus PHILIP
18、 -15-10-50510152025Jan-10 Feb-10 Mar-10 Apr-10 Apr-10bpSource: Deutsche Bank, Bloomberg In corporate credit, we continue to favour the stronger double-B names in our universe. We believe the recent drop in bond prices in the china property sector provides a good opportunity to enter into fundamental
19、ly stronger bonds such as AGILE17 (YTM:10.5%). We believe that the company is well positioned to withstand the controlling measures introduced by the government. Aside from the Chinese property space, TRECN14 bonds appear attractive at a mid-yield of 8.4% with investment grade like credit ratios. A
20、defensive business model coupled with disciplined financial profile makes Sino-Forest essentially one of the strongest upgrade candidates in the double-B space. In the shipping space, we favour BWGRP17 at the current mid-yield of 7.9%. The company is well positioned to leverage the benefits of a rec
21、overing shipping industry with more than 60% of the revenue already contracted and exposure across diverse segments such as LNG, LPG, offshore and tankers. Sound liquidity profile, with limited committed capex provides additional business flexibility. We believe the Singapore banks are among the def
22、ensive plays in the Asian banking sector. We like the resilient credit profile of DBS, OCBC and UOB given their strong balance sheet and established regional footprint. Better earnings are likely to be reflected in 2010 on improved economic outlook, driving spreads tighter in our view. The DBSSP 201
23、7-C12 lower tier 2 bond comes out the cheapest among the lot with fixed rate notes at T+214bps and the floating rate note offering a 3.5% mid-yield. For a slightly longer-dated callable tier 2 bond, DBSSP 2021-C16 floating rate notes offer a mid yield of c.6%. 7 May 2010 Corporate Credit Asia Credit
24、 Weekly Deutsche Bank AG/Hong Kong Page 5 China Property Bonds feeling the heat (Part II) It has been a very volatile week for Chinese property bonds. Most of the benchmark names are lower by about 6-7 pts and has played catch up with the plunging equity prices over the past 2-3 weeks on the back of
25、 continued news flow relating to tightening measures. In the new issue front, Fantasia received poor response from the market for its USD bond issue and managed to issue only $120mn at 14.5% yield. With KAISA15 currently indicated at 15.2%, we do not believe that the new Fantasia bonds award attract
26、ive risk reward propositions. Given the unfavourable market conditions, Renhe commercial announced today that the company will delay its proposed notes issue. In the midst of this volatility, the individual contracted sales numbers reported during the week turned out to be stronger-than-expected. As
27、 shown in the table below, developers are still showing relatively strong contracted sales numbers in April. However, in reality, evidence suggests that transaction volumes have dropped significantly over the past two weeks. According to data compiled by our equity colleagues, during the week of Apr
28、il 26% the total weekly transaction volume for the 35 major cities in China was down 24.5% WoW. As expected, some developers have resisted price cuts at this initial stage. However we are now seeing developers starting to offer price discounts to stimulate sales. Evergrande announced that they will
29、cut prices by 15% for 40 of its projects across China. Overall we believe this slowdown will be more apparent in the May sales numbers and expect sequential drop in sales in the next few months. Figure 5: YTD sales yet to show weakness Shimao Country Garden Evergrande YTD sales (RMBbn) 8.00 9.50 12.
30、13 yoy growth 13% 106% 120% YTD ASP (RMB/sq.m) 10,852 5,621 6,408 yoy growth 11% 20% 37% YTD GFA 0.74 1.69 1.893 yoy growth 2% 72% 60% April (RMBbn) 2.50 3.00 3.74 yoy growth N/A 180% 56% Source: Company Data OCBC Strong 1Q10 results: maintain CreditBuy on OCBC 2019-C14 OCBC reported a strong 1Q10 n
31、et profit of SG$676mn on significant improvements in non-interest income and allowances for loans and other assets. Fee and trading income, life assurance profits and gains from securities underpinned the 37%qoq non-interest income growth. These had offset higher operating expenses and the lacklustr
32、e net interest income growth on the Bank of Singapore (BoS) consolidation (formerly ING Asia Private Bank). NIM declined by -5bps qoq on lower gapping income and average asset yields due to sustained low rates. Excluding BoS, NIM was relatively flat at 2.09%. BoS accounted for 5% of total loans as o
33、f 1Q10. Asset quality remains good with reduced absolute NPLs, lower provision expenses and slower new NPA formation. NPL ratio and allowance coverage ratio improved to 1.5% and 7 May 2010 Corporate Credit Asia Credit Weekly Page 6 Deutsche Bank AG/Hong Kong 107%, respectively. Post-consolidation, t
34、otal CAR slipped down to 15% (T1 CAR: 14%, core T1 ratio: 10.8%) on higher risk weighted assets and goodwill. We reiterate our CreditBuy recommendation on OCBC 4.25% 2019-C14 (T+160bps) given the strong balance sheet and on improved 2010 outlook. We maintain our CreditHold recommendation on OCBC 7.7
35、5% 2011 on limited spread compression. Key downside risks further NIM contraction, weakening of asset quality and lower fee income. Key upside risks to our CreditHold recommendation are robust recovery of margins, credit quality and/or earnings from investment markets. Figure 6: Summary of quarterly
36、 financials in SGD mn 1Q09 4Q09 1Q10 QoQ YoYNet interest income 740 687 704 2.5% -4.9%Non-interest income 607 497 681 37.0% 12.2%Operating expenses (413) (466) (502) 7.7% 21.5%Operating profit 934 718 883 23.0% -5.5%Allowances (197) (77) (25) -67.5% -87.3%Reported net profit 545 502 676 34.7% 24.0%N
37、IM 2.42% 2.08% 2.03% -0.05% -0.39%LDR 85.3% 80.4% 81.9% NPLs 1,424 1,384 1,319 -4.7% -7.4%NPL ratio 1.8% 1.7% 1.5% Allowances/NPAs 109.5% 102.4% 107.3% Loan growth (YoY) 6.5% 1.3% 12.8% 9.9% Total CAR 15.8% 16.4% 15.2% Source: Deutsche Bank, Company data For more information please refer to the repo
38、rt titled “OCBC: Strong 1Q10 results: maintain CreditBuy in OCBC 2019-C14” 05th May 2010 BUMA Maintain CreditBuy post strong 1Q10 results We maintain our CreditBuy recommendation on PTBMMU14 following the strong 1Q10 results release. While 1Q is seasonally a weak quarter, YoY we see improvement in o
39、perational performance and financial numbers. As such, we maintain our 2010 projections with top-line of IDR6.8tn (+7.5% YoY) and EBITDA of IDR2.3tn (+10.8% YoY). During the quarter, the company managed to sign bilateral financing agreements worth US$110mn. This along with the cash in hand of IDR607
40、bn and expected sound cash flow from operations should ensure a manageable liquidity profile in 2010. As we had pointed in our previous publications, we believe the potential acquisition of Berau by Delta Dunia should be positive to the overall group. While, the acquisition could trigger debt refina
41、ncing requirements at BUMA level, especially with the term loan, we believe the company is well positioned to sail through this. Thus, at the current mid-yield of 9.0% we believe PTBMMU14 remains as one of the attractive names in the Indo coal space and the BB universe. Solid 1Q10 results Buma repor
42、ted 1Q10 revenues of IDR1.2tn, down 9.2% YoY and EBITDA of IDR465bn, down 10.8% YoY (Figure 1). The declines were driven by appreciation of the Rupiah (greater than 20% YoY), lower fuel costs and customers providing their own fuel. In USD terms, revenues and EBITDA increased 4.4% and 13.0% YoY, resp
43、ectively driven by longer hauling distances and contract re-pricing. Overburden removal volume declined 3.1% YoY to 61.7mn bcm while coal production increased by 1.3% YoY to 7.9mn tons. The implied stripping ratio was 7.8x and coal hauling was 3.7mn tons (Figure 2 & 3). 7 May 2010 Corporate Credit A
44、sia Credit Weekly Deutsche Bank AG/Hong Kong Page 7 BUMA signs new bi-lateral loans totalling to US$110mn Buma announced that it has signed a series of bi-lateral financing agreements over the past six weeks totalling US$110mn. This comprises of US$80mn with PT Komatsu Astra Finance, US$10mn with PT
45、 Bank Danamon and US$20mn with PT Bank Permata. The facilities will be used to finance heavy equipment purchases. The facilities have four year amortizing tenors and are structured on a limited recourse basis with security over the financed equipment. Key risks Key risks to our recommendation are 1)
46、 inability to refinance the term loan 2) potential negative impact from new mining laws and 3) failure to maintain key contracts and secure new contracts. For more information please refer to the report titled “BUMA: Maintain CreditBuy post strong 1Q10 results” 04th May 2010 Indika Energy Solid 1Q10
47、: Maintain CreditHold We maintain our CreditHold recommendation on Indika 12s and 16s following solid 1Q10 results and our expectation that the company will look to deploy its large cash balance for acquisitions. Debt levels declined slightly in the quarter and cash (incl. restricted cash) remains r
48、obust at Rp4.6tn. Given the companys large cash balance and managements appetite for M&A, we believe Indikas credit ratios and liquidity profile may come under pressure over the short term. The uncertainly of what type of acquisition Indika may be pursuing can increase the execution risk. Our RVM (R
49、elative Value Monitor) analysis shows both the 12s and 16s as looking fair to rich with RVI (Relative Value Indicator) at -0.04 and -0.21, respectively. In the quarter Kidecos revenue increased 14% YoY to US$336.5mn with sales volume up 26% YoY to 7.3mn tones. ASP however declined 9% YoY to US$52.4/ton. With only 40% of its contracted coal volume al
