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JD.com
- Sector: Media and TelecommunicationsTechnology
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 29 Apr 2025We maintain our Market perform recommendation on JD post its 4Q24 results, where it reported a pick up in topline growth, better EBITDA margin, higher FOCF and improving debt metrics; We expect JD’s debt metrics to improve over the next 12 months as the JD Home Appliance Trade-In Alliance program and expanding supermarket category supports topline growth and a continued expansion of the higher-margin 3P sales and better product mix result in better EBITDA margin; we expect JD to cover its increased shareholder rewards with free operating cash flow. We think its positive credit outlook over the next 12 months has been largely priced in given that JD’s $ bond trades largely in-line with Asia A- corporates; we see better value in BABA and TENCNT.
Business Description
AS OF 29 Apr 2025- JD is one of China's leading e-commerce and retail infrastructure service providers.
- JD has a large fulfillment infrastructure which includes over 1,600 warehouses operated by the company, and 2,000 cloud warehouses operated by third-party warehouse owner-operators under JD Logistics Open Warehouse Platform. Its warehouse network had an aggregate gross floor area of approximately over 32 mn square meters, as of 31 December 2023.
- JD has 3 operating segments, namely (1) JD Retail (84% of 4Q24 revenues), which includes JD Health and JD Industrials, and the segment mainly engages in online retail, online marketplace and marketing services in China; (2) JD Logistics (14%) which includes both internal and external logistic businesses; and (3) New businesses (1%) which consist of Dada, JD Property, Jingxi and overseas businesses.
- JD had a market capitalization of RMB 345.5 bn as of 29 April 2025.
Risk & Catalysts
AS OF 29 Apr 2025While Chinese regulators have adopted a friendlier stance towards tech companies, any regulatory clampdowns may still adversely affect the business of JD (e.g. antitrust rules, data security & personal data protection laws).
Intensifying competition amongst Chinese eCommerce platforms with the entrance of new live-streaming/short-form video platforms and group buying discount platforms may result in slower topline growth and weaker EBITDA margin for JD as its increase its user/merchant incentives and promotional activities to defend its market share.
There are regulatory risks involving the use of variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs). Specifically, VIE transactions involving “change in control” will be subject to antitrust regulatory processes.
Key Metric
AS OF 29 Apr 2025| RMB mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 12.5% | 12.2% | 19.2% | 18.8% | 22.3% |
| Debt/Total Equity | 14.2% | 13.8% | 23.7% | 23.1% | 28.7% |
| Debt/Total Assets | 7.5% | 6.9% | 10.9% | 10.9% | 12.9% |
| Gross Leverage | 1.4x | 1.8x | 1.9x | 1.5x | 1.7x |
| Interest Coverage | 20.1x | 16.1x | 16.3x | 15.5x | 18.5x |
| EBITDA Margin | 3.0% | 2.0% | 3.3% | 4.1% | 4.6% |
CreditSight View Comment
AS OF 07 Mar 2025We maintain our Market perform recommendation on JD post its 4Q24 results, where it reported a pick up in topline growth, better EBITDA margin, higher FOCF and improving debt metrics; We expect JD’s debt metrics to improve over the next 12 months as the JD Home Appliance Trade-In Alliance program and expanding supermarket category supports topline growth and a continued expansion of the higher-margin 3P sales and better product mix result in better EBITDA margin; we expect JD to cover its increased shareholder rewards with free operating cash flow. We think its positive credit outlook over the next 12 months has been largely priced in given that JD’s $ bond trades largely in-line with Asia A- corporates; we see better value in BABA and TENCNT.
Recommendation Reviewed: March 07, 2025
Recommendation Changed: November 21, 2022
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Search topics about wealth insights and investments.Baidu
- Sector: Media and TelecommunicationsTechnology
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 29 Apr 2025We maintain M/P on Baidu post its in-line 4Q24 results; the contraction in Baidu’s revenues were less than feared thanks to its AI-cloud business, which partially offset the weaknesses in the online marketing and iQiyi segments. EBITDA margin fell and FOCF contracted YoY; debt metrics marginally weakened and net cash contracted. We expect Baidu’s revenue to turnaround in FY25 and EBITDA margin to improve on recovering advertising revenues and the continued strength in its AI cloud business; we forecast its FOCF to expand, but we do not expect the company to significantly reduce its gross debt as the bulk of FOCF would be used for share buybacks. We continue to prefer Alibaba and Tencent over Baidu among A-rated China Tech. For investors looking for exposure in Baidu, we prefer its 2028s.
Business Description
AS OF 29 Apr 2025- Founded in 2000, Baidu started out as a search engine business and began its development into artificial intelligent (AI) since 2010.
- Baidu Core is the main revenue driver of the company (79% of 3Q24 revenues) which provides search-based, feed-based and other online marketing services (total: 56% of 3Q24 revenues), as well as products and services from new AI initiatives (23% of revenues); Baidu's AI initiatives include AI cloud (enterprise & public sector cloud, and personal cloud), Intelligent Group Driving (Apollo Go, Apollo auto solutions, and intelligent EVs under Jidu Auto), Mobile Ecosystem (Baidu App, ERNIE Bot, Haokan and Baidu Post), and other growth initiatives (ie. Xiaodu smart devices powered by DuerOS smart assistant and AI chips).
- iQiyi accounts for the remaining revenues of Baidu; iQIYI is an online video platform with a content library that includes licensed movies, television series, cartoons, and other programs.
- Baidu launched ERNIE bot in Mar-23, a generative AI chatbot powered by ERNIE, Baidu's in-house foundation model.
- Baidu has a market capitalization of RMB 226.5 bn as of 29 April 2025.
Risk & Catalysts
AS OF 29 Apr 2025Any regulatory clampdowns abroad and domestically (e.g. potential US investment ban, antitrust rules, data security and personal information protection laws) may adversely affect the business of Baidu. The interpretation of Chinese laws and regulations involves some degree of uncertainty.
There are regulatory risks given the corporate structure which uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs).
Baidu has made significant investments into long-term AI-related projects, which may take time to turn profitable. A potential escalation of the US chip restriction could have a material negative impact its AI related business (ie. cloud, ernie bot, autonomous driving).
Key Metric
AS OF 29 Apr 2025| RMB bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 30.4% | 29.7% | 28.5% | 25.0% | 22.5% |
| Debt/Total Equity | 43.8% | 42.2% | 39.8% | 33.4% | 29.0% |
| Debt/Total Assets | 24.8% | 24.1% | 23.4% | 20.8% | 18.5% |
| Gross Leverage | 2.7x | 3.3x | 2.8x | 2.2x | 2.0x |
| Interest Coverage | 9.8x | 8.2x | 11.4x | 12.1x | 13.7x |
| EBITDA Margin | 28.5% | 22.6% | 26.8% | 29.2% | 29.1% |
CreditSight View Comment
AS OF 19 Feb 2025We maintain M/P on Baidu post its in-line 4Q24 results; the contraction in Baidu’s revenues were less than feared thanks to its AI-cloud business, which partially offset the weaknesses in the online marketing and iQiyi segments. EBITDA margin fell and FOCF contracted YoY; debt metrics marginally weakened and net cash contracted. We expect Baidu’s revenue to turnaround in FY25 and EBITDA margin to improve on recovering advertising revenues and the continued strength in its AI cloud business; we forecast its FOCF to expand, but we do not expect the company to significantly reduce its gross debt as the bulk of FOCF would be used for share buybacks. We continue to prefer Alibaba and Tencent over Baidu among A-rated China Tech. For investors looking for exposure in Baidu, we prefer its 2028s.
Recommendation Reviewed: February 19, 2025
Recommendation Changed: August 31, 2022
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Search topics about wealth insights and investments.Alibaba
- Sector: Technology Media and Telecommunications
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 29 Apr 2025We maintain our Outperform recommendation on Alibaba post its decent F3Q25 results; topline growth were ahead of expectations thanks to improving monetization of domestic eCommerce and cloud demand accelerated; though, wider losses for international eCommerce weighed on EBITDA margin, and higher capex for cloud/AI led to a fall in FOCF; debt metrics remained modest and net cash expanded. We expect Alibaba’s topline growth (excl. Sun Art and Intime) to accelerate over F4Q25 and FY26; we expect EBITDA margin to stay flat, but FOCF to trend lower on a material increase in capex for cloud; we expect Total debt/EBITDA to remain stable, and Alibaba to maintain its healthy net cash position. We view the credit as a core holding in China and Asia IG; we like its 2030/2031/2035/2041 in particular.
Business Description
AS OF 29 Apr 2025- Founded in 1999, Alibaba is the largest retail commerce company in the world based on gross merchandise volume (GMV) as of 31 March 2023.
- The company's business segments comprise Taobao & Tmall Group (44% of F3Q25 revenue; China e-commerce incl. Taobao, Tmall, Taobao Deals, Taocaicai, 1688.com), International Digital Commerce (12%; incl. Lazada, AliExpress, Trendyol and Daraz), Cloud Intelligence Group (11%; incl. AliCloud, AI), logistic provider Cainiao (9%), Local Consumer Services (5%; incl. Ele.me, Amap), and Digital Media and Entertainment (2%, incl. Youku & Alibaba Pictures) and Others (17%; incl. Freshippo, Fliggy, Alibaba Health, Intelligent Information Platform, SunArt, DingTalk).
- Taobao/Tmall is Alibaba's core business and the main EBITA & cash generation unit of the group. Alibaba's annual active consumer exceeded 1 bn in June-2022.
- Alibaba had a market capitalization of RMB 2.1 tn as of 29 April 2025.
Risk & Catalysts
AS OF 29 Apr 2025While Chinese policymakers have adopted an increasingly friendly stance towards tech platforms, regulatory clampdown (e.g. anti-monopoly guidelines, data security laws, personal information protection laws) may still affect Alibaba as it increases compliance cost. There are regulatory risks given the corporate structure which uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs).
Intensifying competition amongst eCommerce platforms may result in slower topline growth and weaker EBITDA margins.
Alibaba does not control Alipay but relies on Alipay to conduct substantially all the payment processing and escrow services on its marketplaces.
US-China tension may escalate under the new Trump Administration, including additional chip sanctions, which may result in higher volatility. Failing to secure a stable supply of advanced AI chips and/(or) find domestic alternatives could weigh on the long-term AI development of Tencent against international peers.
Key Metric
AS OF 29 Apr 2025| CNY BN | FY21 | FY22 | FY23 | FY24 | LTM F3Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 12.1% | 11.6% | 12.6% | 13.3% | 17.5% |
| Debt/Total Equity | 13.8% | 13.1% | 14.4% | 15.3% | 21.1% |
| Debt/Total Assets | 8.8% | 8.3% | 9.2% | 9.7% | 12.5% |
| Gross Leverage | 0.8x | 0.9x | 0.9x | 0.9x | 1.2x |
| Interest Coverage | 39.9x | 32.2x | 29.6x | 24.0x | 20.2x |
| EBITDA Margin | 24.9% | 18.5% | 20.2% | 20.3% | 19.1% |
CreditSight View Comment
AS OF 21 Feb 2025We maintain our Outperform recommendation on Alibaba post its decent F3Q25 results; topline growth were ahead of expectations thanks to improving monetization of domestic eCommerce and cloud demand accelerated; though, wider losses for international eCommerce weighed on EBITDA margin, and higher capex for cloud/AI led to a fall in FOCF; debt metrics remained modest and net cash expanded. We expect Alibaba’s topline growth (excl. Sun Art and Intime) to accelerate over F4Q25 and FY26; we expect EBITDA margin to stay flat, but FOCF to trend lower on a material increase in capex for cloud; we expect Total debt/EBITDA to remain stable, and Alibaba to maintain its healthy net cash position. We view the credit as a core holding in China and Asia IG; we like its 2030 and 2031 in particular.
Recommendation Reviewed: February 21, 2025
Recommendation Changed: August 05, 2022
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Woori Financial Group
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Search topics about wealth insights and investments.San Miguel Corporation
- Sector: Manufacturing
- Sub Sector: Diversified Conglomerates
- Country: Philippines
- Region: Philippines
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Fundamental View
AS OF 22 Apr 2025SMC’s FY24 earnings and credit metrics EBITDA improved YoY as we had expected from resilient broad-based demand recovery, lower thermal coal input costs, new project contributions, and good cost control measures.
We are comfortable with SMC’s large diversified operations and dominant market share in key sectors, which could outweigh its persisting high airport and infrastructure capex.
We see low non-call risk for the c.2025 and c.2026 perps in the SMC complex, given SMC’s strong ability and willingness to repay earlier perps at SMC GP, good access to diverse funding channels, and deep reputational concerns upon a non-call.
Business Description
AS OF 22 Apr 2025- SMC is a massive conglomerate in the Philippines with business interests across six business segments: Food & Beverage (F&B), fuel refining and retailing, power, packaging, infrastructure, and others.
- Its F&B business is operated through San Miguel Food & Beverage, the largest F&B company in the Philippines with three main divisions: Beer and Non-alcoholic Beverage (including beers and juices), Spirits (gin and Chinese wine), and Food (including packaged foods, animal feeds, poultry and fresh meats).
- SMC’s fuel refining and retailing business is operated through Petron Corporation (~68% stake), the largest oil refining and retailing company in the Philippines, and one of the largest in Malaysia. Petron has a total refining capacity of ~268k barrels/day.
- SMC’s power business is operated through SMC Global Power Holdings (SMC GP, 100% stake), one of the largest power generating companies in the Philippines. It maintains a diversified portfolio across coal (62%), natural gas (26%), and renewable energy (12%) sources.
- Through its packaging business, it manufactures glass containers, plastic crates, pellets, bottles and caps, aluminium cans, and other types of packaging products.
- It operates its Infrastructure business through San Miguel Holdings Corp (SMHC), in which it holds a 100% stake. It currently operates ~190 km of toll roads in the country, connecting high-traffic, arterial routes in Luzon.
Risk & Catalysts
AS OF 22 Apr 2025SMC’s revenues are concentrated in the Philippines (~80%), which poses geographical concentration risk.
SMC incurs significant capex, particularly in its power/energy and infrastructure businesses. In October 2020, SMC began construction of the mega New Manila International Airport (requires ~PHP 750 bn of capex spread over 5-7 years). This could keep SMC’s credit metrics elevated and free cash flows in negative territory.
As a holding company, SMC is reliant on dividend upstreaming from its operating subsidiaries to service its debt, which can be difficult should the operating subsidiaries face cash flow difficulties.
SMC operates in the businesses of thermal power generation and fuel refining, which may be looked at unfavourably by some ESG-focused investors.
Key Metric
AS OF 22 Apr 2025| PHP bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 65.2% | 66.4% | 72.3% | 71.6% | 73.0% |
| Net Debt to Book Cap | 46.7% | 51.7% | 58.5% | 60.4% | 61.2% |
| Debt/Total Equity | 187.0% | 197.9% | 261.3% | 251.9% | 269.9% |
| Debt/Total Assets | 64.1% | 65.7% | 69.8% | 68.1% | 68.2% |
| Gross Leverage | 10.9x | 8.1x | 9.1x | 8.4x | 8.3x |
| Net Leverage | 7.8x | 6.3x | 7.4x | 7.1x | 7.0x |
| Interest Coverage | 2.1x | 3.1x | 2.8x | 2.1x | 2.1x |
| EBITDA Margin | 15.5% | 17.6% | 12.2% | 13.8% | 14.0% |
CreditSight View Comment
AS OF 22 Apr 2025We have a Market perform recommendation on SMC and its sole c.Jul-25 $ perp; we see limited extension risk for SMC’s perp, yet we don’t see much price upside from current levels. SMC’s c.Jul-2025 trades close to par and fairly to Ayala Corp’s c.Sep-2026 in our view. We like SMC’s dominant market position in multiple sectors, long operating track record and diversified operations. Yet it incurs sizable airport and infrastructure capex that would likely keep its credit metrics elevated and free cash flows negative. Meanwhile, we remain watchful of SMC’s ability to support SMC GP past 2025.
Recommendation Reviewed: April 22, 2025
Recommendation Changed: April 05, 2023
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 22 Apr 2025Petron’s FY24 results improved slightly; we expect Petron’s credit metrics to remain flat to improve slightly in FY25 owing to higher capex and flattish % YoY EBITDA growth amid a single-digit YoY decline in sales volume growth though partially supported by lower crude oil input costs
About two-third of its total revenues are derived from the Philippines and are indexed to Dubai crude prices, which allows for smooth cost pass-throughs and good insulation from crude price volatility.
Free cash flows are typically negative due to inventory fluctuations that outweigh low capex.
Business Description
AS OF 22 Apr 2025- Petron is the largest oil refining and retailing company in the Philippines, and the third largest player in Malaysia. It maintains a 24% market share in the Philippines (followed by Shell and Caltex) and a 20% market share in Malaysia (largest being Petronas), based on total fuel sales volumes.
- Petron has a total refining capacity of 268k barrels/day (bpd) and accounts for about 30% of the Philippines' fuel needs. Its petroleum refining facilities include the Limay Refinery in Bataan, Philippines (capacity of 180k bpd; 67% of total) and the Port Dickson Refinery in Negeri Sembilan, Malaysia (capacity of 88k bpd; remaining 33% of total).
- Petron's refineries process crude oil into a full range of petroleum products including gasoline, diesel, LPG, jet fuel, kerosene and petrochemicals.
- It further markets and retails these fuel products through its fuel service stations located across the Philippines (~1,800 outlets) and Malaysia (>800 outlets).
- Petron sources its crude oil supplies from third-party suppliers, namely Saudi Aramco, Kuwait Petroleum Corporation and Exxon Mobil, which are bought on the basis of term contracts and in the spot market.
- Petron mainly supplies its petroleum and fuel products to customers in Malaysia and the Philippines (~95% of annual revenue).
- Petron is 68% owned by San Miguel Corporation (SMC), one of the largest and most diversified conglomerates in the Philippines based on total revenues and assets. SMC's CEO, Mr. Ramon Ang, is also Petron's CEO.
Risk & Catalysts
AS OF 22 Apr 2025Petron cannot fully pass on higher crude oil input costs to customers in Malaysia.
Petron operates in low-margin business (EBITDA margins ~5%) and maintains elevated credit metrics.
Petron is highly dependent on its Limay petroleum refining complex that makes up two-thirds of its total refining capacity (67%). Any events that disrupt the refinery’s operations could adversely affect Petron’s total revenues.
Key Metric
AS OF 22 Apr 2025| PHP bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 74.3% | 72.3% | 74.0% | 75.1% | 74.5% |
| Net Debt to Book Cap | 66.3% | 63.3% | 65.5% | 68.2% | 67.1% |
| Debt/Total Equity | 289.4% | 261.6% | 284.2% | 301.4% | 292.0% |
| Debt/Total Assets | 71.3% | 71.2% | 70.2% | 67.6% | 64.9% |
| Gross Leverage | 65.4x | 11.2x | 10.9x | 7.1x | 7.4x |
| Net Leverage | 58.3x | 9.8x | 9.7x | 6.4x | 6.7x |
| Interest Coverage | 0.3x | 2.5x | 2.2x | 2.2x | 1.9x |
| EBITDA Margin | 1.3% | 5.9% | 3.4% | 5.3% | 4.7% |
CreditSight View Comment
AS OF 22 Apr 2025We maintain our Market perform recommendation on Petron. Petron’s c.Apr-2026 perp trades rightfully tighter than SMC c.Jul-2025 perp, which we see as fair given its Opco structure vs. SMC’s Holdco, its cost pass-through mechanisms, and low capex which more than offset SMC’s larger diversified businesses. Overall, we continue to take comfort in Petron’s resilient credit profile, supported by a good cost-passthrough contractual mix that provides good insulation from crude price volatility. We expect Petron to incur higher capex YoY, and expect credit metrics to remain flat-to-improve slightly in FY25 owing to higher capex and flattish % YoY EBITDA growth amid lower crude oil input costs, as well as a further ~PHP 15 bn of preference share issuances.
Recommendation Reviewed: April 22, 2025
Recommendation Changed: January 26, 2022
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International Container Terminal Services Inc
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Search topics about wealth insights and investments.SMC Global Power
- Sector: Energy
- Sub Sector: Independent Power Producers
- Country: Philippines
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Fundamental View
AS OF 22 Apr 2025We see lower non-call risk for SMC GP’s c.2025 and c.2026 perps owing to strong near-term parental funding support, its recent c.2024 perp refinancing, and recent bond exchange/tender with a new $900 mn c.2029 perp issuance.
We see an improving credit outlook for SMC GP aided by lower thermal coal input costs, new contracts, and capacity additions. Net cash inflows of $2.1-$2.2 bn from the completion of an LNG deal is also positive.
While SMC GP improved its cost passthrough contractual mix from end-FY23 onwards, the company still remains exposed to high thermal coal input costs (~40-50% of contracts).
SMC GP incurs sizable capex that has led to additional debt incurrence and elevated credit metrics.
Business Description
AS OF 22 Apr 2025- SMC GP is a leading power generation and distribution company in the Philippines. As at 31 December 2021, its total generation capacity stood at 4.7 GW, accounting for ~20% of the national grid.
- The bulk of its revenues is derived from power generation (~82%), with the remainder from electricity distribution and retailing (~18%).
- It operates 7 power generating plants across diversified energy sources, comprising coal (~62%), natural gas (~25%), hydro (~12%) and battery energy storage (~1%).
- Through long-term power supply agreements and retail supply contracts, SMC GP either sells electricity directly to customers (including large Philippines power distribution company Manila Electric Company, distribution utilities and other industrial customers), or through the Philippine Wholesale Electricity Spot Market.
- SMC GP acts as the Independent Power Producer Administrator (IPPA) for three power plants (~54% of total capacity), where it has the right to sell electricity generated by the IPPs without having to bear large upfront capital expenditures for plant construction and maintenance.
- SMC GP also distributes and retails electricity services through its wholly-owned subsidiary Albay Power and Energy, which distributes power in the province of Albay, Luzon.
- SMC GP is a wholly-owned unlisted subsidiary of San Miguel Corporation, one of the largest and most diversified conglomerates in the Philippines based on total revenues and assets.
Risk & Catalysts
AS OF 22 Apr 2025SMC GP still has $307 mn/$1.2 bn of c.2025 and c.2026 perps outstanding to be addressed, though we see low non-call risks.
A moderate portion of SMC GP’s off-take contracts do not contain cost pass-through mechanisms. This exposes the company to a rise in thermal coal input costs that could squeeze its EBITDA margins.
SMC GP incurs sizable capex that has spurred additional debt incurrence. Consequently, its credit metrics remain elevated.
Over 80% of SMC GP’s installed capacity is thermal coal or gas-fired, which may be viewed unfavorably from an ESG perspective.
Key Metric
AS OF 22 Apr 2025| PHP bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 68.8% | 66.7% | 69.2% | 62.8% | 64.4% |
| Net Debt to Book Cap | 53.6% | 57.7% | 66.4% | 59.4% | 57.7% |
| Debt/Total Equity | 220.7% | 199.9% | 224.6% | 168.7% | 181.2% |
| Debt/Total Assets | 81.9% | 79.2% | 79.0% | 73.8% | 73.8% |
| Gross Leverage | 10.5x | 10.5x | 19.4x | 12.9x | 11.9x |
| Net Leverage | 8.2x | 9.1x | 18.6x | 12.2x | 10.7x |
| Interest Coverage | 2.4x | 2.5x | 1.4x | 2.2x | 2.3x |
| EBITDA Margin | 41.3% | 35.9% | 13.2% | 26.4% | 26.6% |
CreditSight View Comment
AS OF 22 Apr 2025We have an Outperform recommendation on SMC GP. We think refinancing risk on the c.2025–2026 perps has meaningfully decreased with the completion of its bond exchange and tender offers. We are comfortable with SMC GP’s improving credit outlook, potential for forthcoming parental support, and management’s willingness and ability to repay the perps. The completion of the $3.3 bn LNG deal is also positive. We continue to see low non-call risk for the c.2025 perps, grow more comfortable with the c.2026 perps that could be refi-ed with new $ perps, and see the 8%+ yields on the c.2029 perps as attractive. Key risks we are watchful of include any weakening of parental funding support (due to SMC’s own sizable infra capex) and overly aggresive capex..
Recommendation Reviewed: April 22, 2025
Recommendation Changed: September 09, 2024
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International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 17 Apr 2025Delta’s focus on premium cabin and atlantic flying driven by its loyalty program lead the airline to enjoy industry best profitability. Delta targets 1x gross leverage, an A level balance sheet in our view.
Delta pulled its full year guidance during 1Q25 earnings and zeroed out capacity growth for the second half of the year, citing a more challenging macro environment given the uncertainty on global trade.
Delta has Outperformed peers this year on its strong credit quality and defensive nature. We are retaining our O/P view and continue to favor DAL compared to LUV. We are happy to capture to 50 bps basis between the two.
Business Description
AS OF 17 Apr 2025- DAL is one of the world's largest airlines with a network comparable to UAL and AAL in size and distribution. It is perceived by the flying public as the "most premium" of the Big Three network carriers in the US.
- DAL has an extensive global network of airline affiliations, including Air France/KLM, Virgin Atlantic, Aeromexico, LATAM, and China Eastern.
- DAL management is the most evolved of the US network airlines, previously focused on used aircraft to lower capital costs and setting up full-cycle maintenance programs, buying a refinery to hedge crack spread, and developing non-commodity products including the leading loyalty program.
Risk & Catalysts
AS OF 17 Apr 2025DAL faces all the industry exogenous risks: geopolitical events, pandemics, oil price volatility, and now recessionary fears.
The recently weaker dollar may manifest as a headwind to international demand. DAL was able to capitalize on strong Atlantic recovery post-pandemic through its extensive existing network; however, it lost its status as the number one airline on US-Europe routes to United which grew very fast in the segment and now occupies the first spot.
The airline noted that demand winds have shifted swiftly after the tariff talks started to pick up. CEO Ed Bastian noted that there was a significant drop in demand, both for consumers in the main cabin and for business travelers. While the premium cabin is currently holding up, it remains to be seen if the recession fears will hit that demand segment as well.
DAL’s 1x leverage target is the lowest target in the industry.
Key Metric
AS OF 17 Apr 2025| $ mn | Y22 | Y23 | Y24 | LTM 1Q25 |
|---|---|---|---|---|
| Revenue | 50,582 | 58,048 | 61,642 | 61,934 |
| EBIT | 3,661 | 5,521 | 5,995 | 5,950 |
| EBITDAR | 6,276 | 8,394 | 9,056 | 9,004 |
| Cash | 3,266 | 2,741 | 3,069 | 3,711 |
| Short Term Investments | 8,412 | 10,061 | 721 | 132 |
| Net Debt | 16,634 | 16,269 | 13,151 | 12,112 |
| Adjusted Debt/LTM EBITDAR | 4.9x | 3.3x | 2.5x | 2.5x |
CreditSight View Comment
AS OF 02 May 2025Delta’s focus on premium cabin and atlantic flying driven by its loyalty program lead the airline to enjoy industry best profitability. Delta targets 1x gross leverage, an A level balance sheet in our view. Delta pulled its full year guidance during 1Q25 earnings and zeroed out capacity growth for the second half of the year, citing a more challenging macro environment given the uncertainty on global trade. Delta has Outperformed peers this year on its strong credit quality and defensive nature. We are retaining our Outperform view and continue to favor DAL compared to LUV. We are happy to capture to 50 bps basis between the two.
Recommendation Reviewed: May 02, 2025
Recommendation Changed: April 12, 2024
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Search topics about wealth insights and investments.Jollibee Foods
- Bond: JFCPM 5.332 30
- Indicative Yield-to-Maturity (YTM): 4.904%
- Credit Rating : Unrated
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Fundamental View
AS OF 08 Apr 2025- Largest QSR Operator in the Philippines: JFC dominates the local fast-food market and continues to expand globally with brands like Jollibee, Chowking, Greenwich, and The Coffee Bean & Tea Leaf.
- Diversified Revenue Streams: Operates a mix of company-owned and franchised stores across multiple markets, reducing reliance on any single region.
- Strong Brand Equity: Maintains a loyal customer base with localized menu offerings and aggressive international expansion in North America, Europe, the Middle East, and Asia.
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Fundamental View
AS OF 07 Apr 2025Petronas’ FY24 credit metrics remained resilient even as EBITDA fell as we had expected.
Despite the lower YoY outlook for O&G price realizations in FY25, we expect Petronas’ credit profile to remain resilient in FY25 and maintain its net cash position, aided by resilient domestic demand and still-positive FCFs.
We take comfort in Petronas’ strong support from the Government of Malaysia, given it is strategically vested with Malaysia’s entire oil & gas resources and provides a substantial source of government income.
Sizable O&G and renewable capex and high dividend payouts could restrain improvements in Petronas’ credit metrics and free cash flows.
Business Description
AS OF 07 Apr 2025- Petronas is an integrated oil and gas company, wholly owned and controlled by the Government of Malaysia.
- Its activities span the entire up/mid/downstream value chain both domestically and internationally. Key products and services provided include the sale and marketing of petroleum products, crude oil and condensates, LNG, natural and processed gas, petrochemicals, shipping services, property development and automotive engineering.
- Petronas carries out its exploration, development and production activities via production sharing contracts (“PSCs”), mostly with international O&G companies and Petronas' wholly-owned subsidiaries.
- Its Downstream segment is aimed at refining, supplying, trading, manufacturing and marketing of crude oil, petroleum products, and petrochemical products. Its key projects and factories include Pengerang Integrated Complex (PIC), Sabah Ammonia Urea in Sabah, and Integrated Aroma Ingredients Complex in Gebeng, Kuantan.
- Its Gas and New Energy division was set up in FY19 and groups all of Petronas' LNG, gas and renewable revenues into a single segment. Activities within this division include production of LNG, processing and transportation of gas and solar power production.
- Its 6 listed subsidiaries include MISC Berhad (57.56%), KLCC Property (75.46%), Petronas Chemicals Group Berhad (64.35%), Petronas Gas Berhad (51%), Petronas Dagangan Berhad (63.94%), and Bintulu Port Holdings Berhad (28.52%).
Risk & Catalysts
AS OF 07 Apr 2025Broad growth slowdown concerns could hamper sales of Petronas’ Downstream (petroleum products) and Gas & New Energy (LNG and natural gas) segments.
Prolonged periods of low crude oil prices could harm upstream O&G EBITDA (which typically contributes 50%-70% of total profit after tax), albeit mitigated partly by stronger downstream O&G EBITDA.
Sizable capex on domestic O&G and renewable energy ventures could restrain improvements in Petronas’ credit metrics and free cash flows.
Petronas is regularly required to pay dividends to the Government of Malaysia, which may weigh on its cash flows.
We remain watchful of how the dispute between Petronas and Sarawak state government unfolds, its impact on Petronas’ financials and its market position in the Malaysian O&G sector.
Key Metric
AS OF 07 Apr 2025| MYR mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 18.8% | 21.1% | 18.4% | 18.2% | 18.0% |
| Net Debt to Book Cap | n/m | n/m | n/m | n/m | n/m |
| Debt/Total Equity | 23.2% | 26.7% | 22.6% | 22.2% | 21.9% |
| Debt/Total Assets | 15.4% | 17.0% | 14.7% | 14.4% | 14.5% |
| Gross Leverage | 1.4x | 1.1x | 0.6x | 0.8x | 0.9x |
| Net Leverage | n/m | n/m | n/m | n/m | n/m |
| Interest Coverage | 15.0x | 20.9x | 33.9x | 24.9x | 21.8x |
| EBITDA Margin | 34.7% | 45.2% | 50.7% | 44.8% | 42.0% |
CreditSight View Comment
AS OF 07 Apr 2025We maintain our M/P rec on Petronas and prefer its existing 2026-2032 and the newly priced 2031. We compare Petronas to Pertamina and think its longer-dateds trade within our fair value range against Pertamina’s longer-dateds. On the other hand, the spread differential between Petronas’ and Pertamina’s shorter-dated have narrowed since Aug-2024, and we see some scope for Petronas’ shorter-dated to tighten. We like Petronas’s larger EBITDA, net cash position, more regular financial reporting than Pertamina and Malaysia’s relative policy stability. With the Petronas vs Sarawak state dispute nearing a resolution, we are more comfortable with the credit though we remain watchful of any negative development should Sarawak further contest the reported agreement.
Recommendation Reviewed: April 07, 2025
Recommendation Changed: September 07, 2020
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Search topics about wealth insights and investments.HCA Healthcare
- Bond: HCA 5.25 30
- Indicative Yield-to-Maturity (YTM): 5.013%
- Credit Rating : BBB
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Fundamental View
AS OF 04 Apr 2025HCA’s volume metrics and EBITDA margins consistently best industry peers, primarily due to strong operational efficiency and an inpatient/outpatient focus within large, healthy markets.
HCA’s credit metrics have improved in recent years and leverage sits near the low end of management’s target net leverage range of 3-4x.
HCA benefits from substantial financial flexibility provided by strong FCF generation and easy access to the capital markets. The company also maintains sufficient liquidity with a well-laddered maturity schedule.
Business Description
AS OF 04 Apr 2025- HCA operates more than 180 hospitals with ~50k beds and 124 freestanding surgery units (as of 4Q24). The company operates in 20 states and England, but ~50% of its hospitals are located in Texas and Florida. HCA is the largest for-profit hospital operator in the US by revenue. HCA also recently purchased 41 urgent care centers in Texas from FastMed for an undisclosed amount.
- HCA has gone private twice since its initial public offering in 1969, most recently in 2006. During periods of private ownership the company has engaged in debt-financed special dividends. HCA returned to public ownership in 2011.
- HCA has been an active consolidator in the industry, acquiring General Health Services, Columbia Healthcare, Hospital Affiliates, and Healthcare Corp, among others. In rationalizing its offering of services and market focus, HCA has sold or spun-off hospital groups such as LifePoint, Triad, and HealthTrust.
Risk & Catalysts
AS OF 04 Apr 2025We see some risk of choppy operating performance tied to an unwind of acuity and payor mix benefits experienced through COVID.
HCA guides to FY25 revenue growth of ~5% and adjusted EBITDA growth of ~6%. Management reported an 8% YoY decline in 4Q24 contract labor costs and with expectations of this trend to continue through FY25.
HCA maintains the flexibility to manage to target leverage levels. Net leverage totaled 3.0x at 4Q24. Management updated its net leverage target to 2.75-3.75x (from 3-4x previously).
HCA’s board recently authorized an additional $10 bn share repurchase program (with a significant portion expected to be completed in FY25).
Key Metric
AS OF 04 Apr 2025| $ mn | Y19 | Y20 | Y21 | Y22 | Y23 | LTM 4Q24 |
|---|---|---|---|---|---|---|
| Revenue | 51,336 | 51,533 | 58,752 | 60,233 | 64,968 | 70,603 |
| SWB | 23,560 | 23,874 | 26,779 | 27,685 | 29,487 | 31,170 |
| Supplies | 8,481 | 8,369 | 9,481 | 9,371 | 9,902 | 10,755 |
| Adj. EBITDA | 9,857 | 10,037 | 12,644 | 12,067 | 12,726 | 13,882 |
| Total Debt | 33,722 | 31,004 | 34,579 | 38,084 | 39,593 | 43,031 |
| Gross Leverage | 3.4x | 3.1x | 2.7x | 3.2x | 3.1x | 3.1x |
| Interest Coverage | 5.1x | 6.2x | 8.4x | 7.3x | 6.7x | 7.2x |
CreditSight View Comment
AS OF 25 Apr 2025We maintain an Outperform recommendation on HCA. HCA remains the strongest hospital operator in the for-profit space, exhibiting operational stability and strong FCF generation. These strengths should help the company weather any tariff- or policy-related headwinds. We see HCA as a good alternative to some of the widest BBB-rated credits in our IG Pharma universe, namely Biogen and Viatris.
Recommendation Reviewed: April 25, 2025
Recommendation Changed: May 02, 2018
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