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Archives: CreditSights Issuer List
Amazon.com
- Sector: ConsumerTechnology Media and Telecommunications
- Sub Sector: Retail/GrocersTechnology
- Region: US
- Bond: AMZN 4.65 29
- Indicative Yield-to-Maturity (YTM): 3.99%
- Credit Rating : A1/AA/AA-
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Fundamental View
AS OF 13 Aug 2025- We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. While the AWS growth rate is below peers, it is a $123 bn run-rate business with high-teens growth and operating margins in the 30s%. We continue to believe that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium, Inferentia), and Bedrock platform.
- Leverage declined slightly to 0.4x gross and 0.9x lease-adjusted gross. While Amazon’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. Also, Amazon’s market cap is $2.4 tn. There are risks related to the FTC suit although we view a breakup as unlikely.
Business Description
AS OF 13 Aug 2025- Amazon is an e-commerce company which sells a wide range of its own products and those of 3rd party sellers. Amazon offers fulfillment services for 3rd party sellers (FBA) and sells cloud computing services (AWS). In 2Q25, 3rd party units were 62% of total paid units, and FBA units are a majority of 3rd party units.
- In LTM 2Q25, NA segment was 60% of sales, International was 22% of sales, and AWS was 17% of sales.
- Amazon disclosed it surpassed 200 mn Prime members in April 2021. The annual membership was increased in February 2022 from $119 to $139 in the US, although fees vary by country. In mid-2019, Amazon Prime began to transition from 2-day to 1-day shipping. Amazon Prime also offers Prime Video, streaming music, and other benefits.
- In 2006, Amazon launched AWS which remains the leader in cloud computing (IaaS/PaaS). Amazon sells its own devices (e-reader, smart speaker, streaming media player, etc.).
Risk & Catalysts
AS OF 13 Aug 2025- We think Amazon has moderate event risk given its large size (~$2.4 tn market cap).
- While Amazon is increasing its Capex spend, we are encouraged by the ~$19.6 bn reduction in lease-adjusted debt from its peak in 1Q23 through 2Q25.
- Amazon continues to face regulatory scrutiny. In September 2023, the FTC and 17 states filed a lawsuit against Amazon and accused the company of (1) punishing sellers for offering lower prices elsewhere and (2) making Prime eligibility conditional on usage of fulfillment services. The biggest risk would be a breakup, although we view that as unlikely.
- Amazon’s $14 bn acquisition of Whole Foods has shown its proclivity for large M&A, although the regulatory environment could make large deals challenging.
Key Metric
AS OF 13 Aug 2025| $ mn | 2020 | 2021 | 2022 | 2023 | 2024 | LTM 2Q25 |
|---|---|---|---|---|---|---|
| Revenue YoY % | 37.6% | 21.7% | 9.4% | 11.8% | 11.0% | 10.9% |
| EBITDA | 57,284 | 71,994 | 74,593 | 110,305 | 144,162 | 156,248 |
| EBITDA Margin | 14.8% | 15.3% | 14.5% | 19.2% | 22.6% | 23.3% |
| CapEx % of Sales | 12.1% | 13.3% | 11.5% | 8.5% | 12.3% | 15.6% |
| Sh. Ret. % of CFO-CapEx | 0% | 0% | n/m | 0% | 0% | 0% |
| Net Debt | (50,497) | (44,453) | 8,516 | (19,451) | (43,051) | (36,925) |
| Gross Leverage | 0.6x | 0.7x | 1.1x | 0.6x | 0.4x | 0.4x |
| EV / EBITDA | 28.3x | 23.3x | 11.7x | 14.4x | 16.1x | 14.9x |
CreditSight View Comment
AS OF 01 Aug 2025We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. While the AWS growth rate is below peers, it is a $123 bn run-rate business with high-teens growth and operating margins in the 30s%. We continue to believe that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium, Inferentia), and Bedrock platform. We estimate leverage declined slightly to 0.4x gross and 0.9x lease-adjusted gross. While Amazon’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. Also, Amazon’s market cap is $2.5 tn. There are risks related to the FTC suit although we view a breakup as unlikely.
Recommendation Reviewed: August 01, 2025
Recommendation Changed: May 01, 2024
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Fundamental View
AS OF 13 Aug 2025Standard Chartered has been making good progress in the past few years, improving its asset quality and profitability and dealing with legacy litigation issues. Capital, funding and liquidity look solid.
However, tensions between China and the West, including reciprocal trade tariffs between the US and China, and global economic headwinds continue to cloud the near term outlook.
Its unusual business mix – headquartered and regulated in the UK but operating primarily in Asia, Africa and the Middle East – means it is well diversified but sensitive to geopolitical developments and emerging market volatility.
Business Description
AS OF 13 Aug 2025- Standard Chartered PLC is the holding company and listed entity of the group, in which Standard Chartered Bank is the main operating company.
- Although Standard Chartered is headquartered in London and therefore subject to UK banking regulation, its operations are mainly in Asia (Hong Kong is its biggest single market, Africa and the Middle East. It is present in over 60 markets.
- It has the usual variety of businesses across these regions, including corporate and institutional banking, retail banking, commercial banking and private banking. It specialises in trade finance and cross-border cash management.
- It is classified as a G-SIB, with a regulatory capital buffer of 1%.
Risk & Catalysts
AS OF 13 Aug 2025Political tensions in Hong Kong, a slowing economy in China and a weak commercial real estate sector, and a US/China trade war have threatened the growth and stability of some of Standard Chartered’s key markets.
A number of Standard Chartered’s markets have underperformed in the past but are now seen as turnaround stories, including India, Korea, Indonesia and the UAE.
The group has had to improve its AML and sanctions controls. In April 2019, it paid a $947 mn fine to US authorities over breaches of US sanctions and a £102 mn fine to the UK FCA for AML weaknesses.
Key Metric
AS OF 13 Aug 2025| $ mn | 2Q25 | Y24 | Y23 | Y22 | Y21 |
|---|---|---|---|---|---|
| Return on Equity | 12.8% | 8.0% | 7.0% | 5.7% | 4.5% |
| Total Revenues Margin | 2.5% | 2.3% | 2.2% | 2.0% | 1.8% |
| Cost/Income | 57.9% | 64.0% | 64.1% | 66.9% | 74.3% |
| CET1 Ratio (Transitional) | 14.3% | 14.2% | 14.1% | 14.0% | 14.1% |
| CET1 Ratio (Fully-Loaded) | 14.3% | 14.2% | 14.1% | 13.9% | 14.1% |
| Leverage Ratio (Fully-Loaded) | 4.7% | 4.8% | 4.7% | 4.8% | 4.9% |
| Loan Impairment Charge | 0.2% | 0.2% | 0.2% | 0.3% | 0.1% |
| Impaired Loans (Gross)/Total Loans | 2.1% | 2.2% | 2.5% | 2.5% | 2.7% |
CreditSight View Comment
AS OF 13 Aug 2025We revised our recommendation on Standard Chartered HoldCo senior from Underperform to Market perform on 26 April 2023, but we changed our recommendations on Tier 2 and AT1 from Fair to Rich on 10 January 2024. The changes reflect StanChart’s recent resilient performance, while taking into account the potential impact from US tariffs policies and exposure to China. Capital and liquidity ratios are robust, and profitability has improved significantly, but the bank continues to face geopolitical tensions inherent in its extensive operations in Hong Kong, China and the rest of Asia.
Recommendation Reviewed: August 13, 2025
Recommendation Changed: April 26, 2023
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Fundamental View
AS OF 13 Aug 2025UOB has strong stand-alone credit profile and benefits from the high likelihood of support from the government of Singapore, where it is one of the three major local banks.
The bank is more focused on Singapore and Southeast Asia than on Greater China; its traditional strengths are the SME and retail sectors, although its large corporate book is now over 60% of loans.
UOB has been conservatively managed with a sound risk profile, a strong focus on liquidity and a long track record of relatively good performance.
Business Description
AS OF 13 Aug 2025- UOB was established in 1935 as a Chinese family-owned bank catering to the Hokkien (Fujian) community, Singapore's largest Chinese ethnic sub-group. The Wee family owns about 18% of the shares. A further 5.2% is held by the Lien family which previously controlled Overseas Union Bank, which UOB merged within 2001. The Wee family has significant real estate and hospitality interests in Singapore and regionally.
- UOB's main markets are Singapore and Malaysia where its presence dates back to before Singapore's independence. It expanded through acquisitions in Thailand (Bank Radanasin and Bank of Asia) and Indonesia (Bank Buana), and more recently bought over Citi's consumer franchise in Malaysia, Thailand, Indonesia and Vietnam.
- Franchise strengths are in SME and consumer lending. Building & construction accounts for 27% of loans, followed by housing at 24%, financial institutions at 12% and general commerce at 11% at 4Q24.
- Loans by geography comprise Singapore at 50% of loans, Greater China at 14%, Malaysia at 10%, Thailand at 8%, and Indonesia at 3% at 2Q25.
Risk & Catalysts
AS OF 13 Aug 2025UOB has a greater focus on Southeast Asia than its Singapore bank peers, which leaves it open to more asset quality risk in a downturn / high interest rate environment. It has 8% of its loan book in Thailand, where we are cautious about macroeconomic conditions.
The bank has benefited more from the final Basel III rules implementation than its peers – its CET 1 ratio was previously the lowest among the three but now aligns with peers.
Its NPL coverage ratio of 88% is around 50-70 ppt behind peers. However, both collateral and UOB’s SGD 2.8 bn in general provisions will be more than sufficient.
Key Metric
AS OF 13 Aug 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 1.23% | 1.31% | 1.52% | 1.51% | 1.50% |
| ROA | 0.92% | 0.99% | 1.19% | 1.19% | 1.05% |
| ROE | 10.2% | 11.9% | 14.2% | 13.7% | 11.7% |
| Equity to Assets | 9.3% | 8.6% | 8.8% | 9.2% | 9.4% |
| CET1 Ratio (fully-loaded) | 13.5% | 13.3% | 13.4% | 15.4% | 15.1% |
| NPL Ratio | 1.62% | 1.58% | 1.52% | 1.53% | 1.56% |
| Provisions / Loans | 0.20% | 0.20% | 0.25% | 0.27% | 0.34% |
| Liquidity Coverage Ratio | 133% | 147% | 158% | 143% | 142% |
| Net Stable Funding Ratio | 116% | 116% | 120% | 116% | 118% |
CreditSight View Comment
AS OF 08 Aug 2025UOB is conservatively run with a large family ownership and a sound balance sheet. The bank is more focused on Singapore and Southeast Asia than on Greater China. Outside Singapore, its main operations in ASEAN are in Thailand, Malaysia and Indonesia which collectively make up ~20% of its loan book. It acquired Citi’s consumer operations in Thailand, Malaysia, Indonesia and Vietnam, which has been good for the franchise. The bank has benefitted more from the final Basel III rules implementation than its peers – its CET 1 ratio was previously the lowest among the three but now the three banks have similar CET 1 ratios. UOB’s reserve cover is about 50-70 ppt behind the other two peers.
Recommendation Reviewed: August 08, 2025
Recommendation Changed: July 04, 2017
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Fundamental View
AS OF 13 Aug 2025DBS Group has sound standalone fundamentals and benefits from its strong home country. Support may be stronger than peers thanks to its longstanding relationship with the government and Temasek’s ~29% stake.
DBS is a major player in Asian corporate banking, and also has strengths in mass market and private banking. It is also one of Asia’s leading digital banks. Acquisitions have been skillfully handled in the past decade or so.
DBS has performed well in recent years, with a high RoE, and its asset quality has been more resilient than that at UOB and OCBC thanks to its greater exposures to large corps.
Business Description
AS OF 13 Aug 2025- DBS was established in 1968 as a development bank but was subsequently privatised and is now commercially run. The Singapore government retains an indirect stake through its investment vehicle, Temasek (~29%).
- In 1998, DBS moved beyond its wholesale bank origins with the acquisition of POSB that brought along a large mass market customer and deposit base. In 2001, it acquired the former Dao Heng Bank in Hong Kong and in 2008, it acquired a part of the failed Bowa Bank in Taiwan, to supplement its Greater China operations. It also regularly acquired wealth management businesses, such as SocGen's Asian private banking business in 2014 and ANZ's Asian retail and wealth management businesses in Singapore, Hong Kong, China, Taiwan and Indonesia in 2018. Recent acquisitions include Lakshmi Vilas Bank in India, a 16.69% stake in China's Shenzhen Rural Commercial Bank, and Citi's consumer business in Taiwan. The bank is also reportedly considering expanding into Malaysia by purchasing Temasek's 29.1% stake in Alliance Bank Malaysia Bhd.
- As of 1H25, Singapore accounted for 45% of its loan book, with HK (13%), Rest of Greater China (13%), South & Southeast Asia (9%) and Rest of the World (20%) accounting for the rest.
- The bank is well regarded as a digital leader in the banking space, and has steadily built capabilities in private banking and markets businesses.
Risk & Catalysts
AS OF 13 Aug 2025Loan growth has been a recent challenge, with ongoing high repayments in Greater China and potential impact from tariffs.
Asset quality has outperformed the other two Singapore majors with very low credit costs.
The bank encountered some operational issues recently. On 30 April 2024, the MAS removed its restriction on DBS’s non-essential activities, which had been imposed in Nov-23 following IT failures. Its retail payments system had another outage on 2 May 2024.
DBS has an estimated 5%+ of its loan book in India, which is facing the threat of 50% US tariffs. While management said that there is a limited first order impact to DBS given its limited exposure in India to the most affected sectors (textiles, jewelry, apparel, etc.), this remains an area to monitor closely.
Key Metric
AS OF 13 Aug 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 1.14% | 1.32% | 1.60% | 1.69% | 1.71% |
| ROA | 1.0% | 1.1% | 1.4% | 1.5% | 1.4% |
| ROE | 12.5% | 15.0% | 18.0% | 18.0% | 17.0% |
| Equity/Assets | 8.38% | 7.65% | 8.40% | 8.32% | 8.14% |
| CET1 Ratio (fully loaded) | 14.4% | 14.6% | 14.6% | 15.1% | 15.1% |
| NPL Ratio | 1.27% | 1.13% | 1.11% | 1.09% | 1.01% |
| Provisions / Loans | 0.01% | 0.06% | 0.14% | 0.14% | 0.21% |
| Liquidity Coverage Ratio | 135% | 146% | 144% | 147% | 147% |
| Net Stable Funding Ratio | 123% | 117% | 118% | 115% | 114% |
CreditSight View Comment
AS OF 13 Aug 2025DBS performed well for several years under CEO Piyush Gupta, who was succeeded by Ms. Tan Su Shan in March 2025. It has comfortable capital and well managed liquidity. Temasek is the main shareholder. DBS has grown its various businesses sensibly and has been a leading bank for adopting digital technology, recent technology outages notwithstanding. It has also steadily grown its fee income and its regional businesses. WM and transaction banking have been focuses, with bolt-on acquisitions/stakes in private banking and Asian retail banking, more recently in India (Lakshmi Vilas Bank), China (SZRCB) and Taiwan (Citi consumer business). It delivered record high FY4 profits and 1H25 results were peer-leading. Credit costs are very low.
Recommendation Reviewed: August 13, 2025
Recommendation Changed: June 03, 2016
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Fundamental View
AS OF 13 Aug 2025As one of the world’s largest beverage companies KO operates across a diverse geographic footprint and generates stable and robust free cash flow. Where there is spread dislocation between the two, we are generally comfortable swapping between the two names, as we view both credits as capable of sustaining stable credit metrics. We note that KO’s net leverage is in a conservative position despite a recent increase in debt, at the low-end of management’s 2.0-2.5x range.
Our recommendation largely reflects our preference for KO’s pure-play beverage profile, where we are seeing more resistance characteristics than in snacking categories, where PEP generates just over half of its sales.
Business Description
AS OF 13 Aug 2025- KO is the world's largest beverage company, owning, licensing, and marketing numerous brands in over 200 countries worldwide. It has 4 of the world's top 5 nonalcoholic sparkling beverage brands: Coca-Cola, Diet Coke, Fanta and Sprite.
- KO distributes its product through independent and company-controlled bottling distribution operations. KO largely refranchised its wholly-owned bottlers, selling the operations to independent bottlers. This strategy reduced capital intensity and expanded margins.
- KO has two primary businesses: Beverage Concentrates (59% of revenue) and Finished Sparkling & Still Beverages (41% of revenue). KO uses unit case volume growth and concentrate sales volume to evaluate performance.
- In 2024, the Coca-Cola system sold 33.7 bn unit cases of products worldwide, comprised of 69% from sparkling beverages and 47% from trademark Coca-Cola. The system has broad international exposure, with 84% of unit case volume generated outside the U.S.
Risk & Catalysts
AS OF 13 Aug 2025An unfavorable U.S. tax ruling could still result in some leverage creep depending on the ultimate outcome. KO is appealing the ruling, and we expect recent sales growth and proceeds from the planned IPO of the African bottling operations will mitigate the impact of any eventual penalty on the credit profile.
Management has expressed interest in expanding its presence over time in the alcoholic beverage category, although to this point the company has limited its involvement to licensing arrangements for its soft drink brands with large-scale brewers and distillers.
Sugar-based drinks have frequently been the target of RFK Jr’s MAHA movement, introducing risk of SNAP eligibility loss, which could create demand headwinds.
Key Metric
AS OF 13 Aug 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue | 38,658 | 43,046 | 45,784 | 46,897 | 47,012 |
| EBITDA | 12,898 | 13,961 | 14,719 | 15,446 | 15,829 |
| EBITDA Margin | 33.4% | 32.4% | 32.1% | 32.9% | 33.7% |
| EBITDA-CAPEX-INT % of Revenues | 27.9% | 26.9% | 24.8% | 25.0% | 25.8% |
| Total Debt | 42,761 | 39,149 | 42,064 | 44,522 | 49,446 |
| Net Debt | 31,835 | 28,587 | 29,701 | 31,674 | 37,198 |
| Net Leverage | 2.5x | 2.0x | 2.0x | 2.1x | 2.3x |
| EV / EBITDA | 22.4x | 21.8x | 19.4x | 19.5x | 21.6x |
CreditSight View Comment
AS OF 22 Jul 2025We have an Outperform recommendation on KO bonds, reflecting a slight preference for the credit over its high-A beverage peer, PepsiCo, at similar levels. We view both credits as core holds, but our updated view reflects increased comfort with KO’s ability to navigate an expected tax liabilities related to U.S. Tax Court litigation, as well as recent earnout payments related to the Fairlife acquisition. KO has reported steady organic growth led by continued pricing benefits and stable consumption trends across its portfolio of soft drinks. Management guides to a net leverage target of 2-2.5x and we expect the company to maintain metrics in that range over the medium term.
Recommendation Reviewed: July 22, 2025
Recommendation Changed: January 16, 2025
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Search topics about wealth insights and investments.BMO Financial
- Sector: Financial Services
- Sub Sector: Consumer Finance and Banking
- Region: Canada
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Fundamental View
AS OF 13 Aug 2025BMO is geographically diversified within Canada & via its commercial banking business in the U.S. and is also well-diversified by revenue with contribution from fee income businesses.
Credit has performed worse than peers in 2024, but losses have stabilized in 2025, based on underwriting and risk management changes in recent years as well as seasoning effects.
Business Description
AS OF 13 Aug 2025- BMO Financial Group is the third largest depository institution in Canada with C$1.44 tn in assets as of F2Q25 and a market capitalization of US$77 bn. Total deposits were C$958 bn at F2Q25.
- BMO operates 1,890 branches in Canada and the United States in 2024.
- As of YE24, BMO had 1,013 branches within the United States, mostly in the Midwest. BMO ranked 11th in deposit market share in the U.S. (SNL), with a top-2 share in Illinois.
Risk & Catalysts
AS OF 13 Aug 2025BMO has a strong core deposit base in Canada and in the U.S., which mitigates the potential for a liquidity event. BMO remains well-capitalized relative to requirements with a target CET1 ratio of 12.5% (13.5% at F2Q25).
BMO closed the acquisition of Bank of the West from BNP Paribas in February 2023, significantly expanding its footprint in the U.S. We don’t expect deal integration to have much impact on the credit profile.
We view real estate-related risk in Canada as manageable for BMO given low LTV of exposures in vulnerable markets and conservative underwriting. Commercial real estate accounts for ~10% of total loans, and office is quite manageable at ~1% of total.
Credit trends have largely stabilized in 1H25, while provisions could incrementally increase in 2H25 in light of current macro uncertainties.
BMO’s reserves and capital levels all point to BMO maintaining a conservative balance sheet stance and having flexibility to manage through a more extended period of macro weakness in Canada.
Key Metric
AS OF 13 Aug 2025| $ mn | FY21 | FY22 | FY23 | FY24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue | 20,509 | 26,727 | 21,694 | 24,095 | 25,173 |
| Net Income | 6,167 | 10,519 | 3,291 | 5,380 | 5,935 |
| ROAE | 0.98% | 0.98% | 0.98% | 0.98% | 0.98% |
| NIM | 1.56% | 1.56% | 1.56% | 1.56% | 1.56% |
| Net Charge-offs / Loans | 0.14% | 0.08% | 0.14% | 0.39% | 0.43% |
| Total Assets | 797,018 | 860,451 | 969,851 | 1,011,587 | 1,042,299 |
| Unsecured LT Funding | 51,915 | 64,886 | 63,418 | 115,839 | 118,598 |
| CET1 Ratio (Fully-Phased-In) | 13.7% | 16.7% | 12.5% | 13.6% | 13.5% |
CreditSight View Comment
AS OF 16 Sep 2025We maintain our Market perform for BMO, with our preference within the group remaining to trade up in quality to RBC and TD. Surprising deterioration in asset quality metrics was the story throughout the latter part of F2024, with provisions well above historical average levels. Management has attributed the weakness largely to large wholesale loans to new borrowers originated in 2021, but given the steady climb in reserve coverage as well as changes to risk management and underwriting in recent years, BMO is confident quarterly provision ratios should moderate across F2025 alongside further potential benefits from efficiency initatives. This appeared to be the case thus far with the improvement in credit performance particularly notable in F3Q25.
Recommendation Reviewed: September 16, 2025
Recommendation Changed: August 26, 2020
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Fundamental View
AS OF 13 Aug 2025PLN enjoys extremely strong ties with the Government of Indonesia (GoI) given its critical policy role of electrifying the nation. Post the launch of Indonesia’s sovereign wealth fund Danantara, PLN is now indirectly owned by the GoI through Danantara.
PLN delivered a robust set of 1H25 results, with total revenue and EBITDA up 5% and 9% YoY respectively driven by resilient power demand across Indonesia
Looking ahead, we expect PLN’s credit metrics to improve in FY25 supported by higher YoY EBITDA, though partially weighed upon by higher capex; we anticipate FY25 EBITDA growth to be in the mid to high single-digit % YoY, mainly attributable to Indonesia’s healthy economic growth, supporting power demand; we also expect power tariffs to remain flat.
Business Description
AS OF 13 Aug 2025- PLN is involved in the entire electricity value-chain, from power generation, to transmission, distribution and retail.
- It alone accounts for 76% (~47 GW) of Indonesia's generation capacity (of which 8 GW is renewable capacity), while IPPs provide the remainder.
- The company controls and operates the entire transmission and distribution network in the country. It is the sole buyer of electricity produced by IPPs, through power purchase agreements (PPAs).
- It sells electricity to well-diversified off-takers – 41% to households, 25% to industrial customers, 21% to businesses and 12% to others.
- Since 2015, the GoI has gradually implemented monthly tariff adjustments for 13 customer groups, so that rates charged to customers are better matched with production costs.
- However, under the Public Service Obligation (PSO), the company will continue to sell electricity at subsidized rates of 50% to 450-volt amperes (VA) power households and 25% to 900 VA power households. The GoI subsequently reimburses the company for the difference between the subsidized tariff rate and production cost, typically within 2-3 months.
Risk & Catalysts
AS OF 13 Aug 2025The company provides subsidized electricity to certain households for which it subsequently receives reimbursements from the GoI; though these payments tend to get delayed during major events such as COVID-19 pandemic.
In order to increase the country’s electrification ratio to 97%, the company had been mandated by the GoI to develop large electricity capacities through the Fast Track II and 35,000 MW Programs. Implementation of such complex programs has required significant capital expenditure, which has led PLN’s FCF to fall deep into the red in recent years and created a funding gap.
The success of the above programs is also contingent on the company’s ability to source coal cheaply, select quality contractors, acquire land rights and receive adequate subsidy reimbursements from the GoI.
Being primarily a thermal power producer, PLN may be viewed unfavourably from an ESG perspective.
Key Metric
AS OF 13 Aug 2025| IDR bn | FY22 | FY23 | FY24 | 1H24 | 1H25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 28.9% | 27.8% | 27.3% | 27.5% | 27.2% |
| Net Debt to Book Cap | 25.2% | 23.7% | 23.0% | 25.4% | 23.9% |
| Debt/Total Equity | 40.7% | 38.5% | 37.5% | 38.0% | 37.3% |
| Debt/Total Assets | 24.6% | 23.4% | 22.5% | 22.9% | 22.1% |
| Gross Leverage | 4.2x | 4.3x | 3.7x | 4.3x | 3.5x |
| Net Leverage | 3.7x | 3.7x | 3.1x | 4.0x | 3.1x |
| Interest Coverage | 4.3x | 3.6x | 3.7x | 3.2x | 3.7x |
| EBITDA Margin | 30.1% | 26.4% | 29.1% | 29.5% | 30.7% |
CreditSight View Comment
AS OF 13 Aug 2025We have a M/P on PLN and prefer its 2042-2050s. While we think PLN’s shorter-dated is trading slightly tighter than our FV, we do not think the widening potential of its shorter dated is sufficient to warrant an Underperform. Overall, we remain comfortable with PLN’s resilient credit profile supported by healthy domestic power demand, good insulation from input cost volatility and strong state-ownership. While there were concerns of the GoI demonopolizing the power sector, we think PLN’s monopoly is likely to stay after President Prabowo reportedly abandoned plans to allow customers to purchase clean electricity directly from renewable energy developers. That said, we think PLN continue to face higher coal-related ESG risk and elevated capex plans that could weigh on its credit metrics.
Recommendation Reviewed: August 13, 2025
Recommendation Changed: December 06, 2024
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Fundamental View
AS OF 13 Aug 2025SBUX operates and licenses Starbucks cafe locations. The company is current midway through a restaurant revamp aimed at boosting traffic following weak results in 2024. The program aims at improving the in-store coffee shop experience by investing in labor and reducing the prioritization of takeaway.
The turnaround program has a large labor investment component that is weighing on margins. The company has a strong cash flow cushion and management has committed to high-BBB ratings.
The goal/hope is a return to top line growth that enables scaling and then a focus on cost improvement, but year-to-date the company has resisted price increases in a market facing continued cost inflation and an increasingly value-seeking consumer environment.
Business Description
AS OF 13 Aug 2025- SBUX is a leading coffee roaster and retailer. The company operates and licenses over 40,000 Starbucks locations worldwide where it sells premium coffee beverages as well as other specialty drinks and prepared foods. Slightly over half the locations are company operated (52%) and the rest are licensed to third party operators.
- In F2024, SBUX generated $36.2 bn in revenue and $7.0 bn in adjusted EBITDA. SBUX has three reporting segments: N. America (75% of F2024 revenue), which covers cafes in the U.S. and Canada; International (20%), which includes China, Japan, Latin America, and EMEA; and Channel Development (4.9%) which includes revenue from other branded products sold outside retail locations through partnerships with large consumer companies such as Nestle and PepsiCo.
- On a geographic basis, SBUX's two largest regions are the U.S. (42% of cafes), and China (19%).
Risk & Catalysts
AS OF 13 Aug 2025In response to the activist attacks, SBUX announced an unexpected change in CEO and hired Brian Niccol, a veteran of the quick service restaurant industry with a successful track record at Taco Bell and Chipotle.
Lower discretionary spending in the U.S. could continue to weigh on SBUX’s sales outlook. We view its premium-priced beverage offerings as having significant risk of consumer trade down into more value-oriented options.
Investments behind the company’s new store imaging have increased costs and weighed on margins, in large part due to significant investments in labor.
Key Metric
AS OF 13 Aug 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|
| Revenue | 29,061 | 32,250 | 35,976 | 36,176 | 36,689 |
| EBITDA | 6,775 | 6,385 | 7,252 | 7,001 | 5,819 |
| EBITDA Margin | 23.3% | 19.8% | 20.2% | 19.4% | 15.9% |
| EBITDA-Capex to Revenue | 18.3% | 14.1% | 13.7% | 11.7% | 8.6% |
| Total Debt | 14,616 | 15,044 | 15,400 | 15,568 | 17,319 |
| Net Debt | 8,160 | 12,226 | 11,848 | 12,282 | 13,147 |
| Net Leverage | 1.2x | 1.9x | 1.6x | 1.8x | 2.3x |
| Lease Adjusted Debt to EBITDAR | 2.9x | 3.1x | 2.8x | 3.0x | 3.7x |
| EV / EBITDA | 20.4x | 17.1x | 16.1x | 17.6x | 20.2x |
CreditSight View Comment
AS OF 25 Sep 2025SBUX is in the early phases of an operational turnaround plan intent on reigniting foot traffic by improving the in-store experience. The “Back to Starbucks” program has come at the expense of margin due to heavy investments in labor. While the plan is ultimately to increase transactions and tickets due to improved experiences, we are skeptical that the company will be able to recoup the margin. Also, the strategy comes at a time when economic uncertainty could weigh on discretionary purchases. Management has committed to high-BBB ratings, but the margin compression is driving some leverage creep. We recommend a wait and see approach to the name and favor McDonald’s bonds in the meanwhile.
Recommendation Reviewed: September 25, 2025
Recommendation Changed: May 01, 2024
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Fundamental View
AS OF 01 Aug 2025In an industry beset by manufacturing issues and operational hiccups, HWM continues to perform admirably while also paying down debt.
Howmet’s journey up the ratings cycle continues, and we now believe the company will meet the upgrade requirements at all three agencies over the next year, landing the company in the A index by 2026. Howmet management pointed towards 1.1x net leverage by year end, down from 1.5x current.
As such, we continue to like HWM and look forward to a continuing spread tightening cycle for the credit.
Business Description
AS OF 01 Aug 2025- Howmet Aerospace Inc. is the surviving entity of the legacy Alcoa Inc. following two major spin-off transactions in 2016 when Alcoa was spun off and in 2020 when Arconic was spun out. Howmet is now focused on high value add, high margin aluminum, titanium and nickel superalloy casting and forging.
- Products are sold into the Commercial Aerospace , Defense Aerospace, Commercial Transportation, and other end markets. Howmet also has four reportable segments: Engine Products Fastening Systems, Engineered Structures, and Forged Wheels. The Engine Products segment produces investment casting – including airfoils and seamless rolled rings – as well as rotating and structural parts. The Fastening Products segment produces aerospace and industrial fasteners as well as those sold into the commercial transportation, automotive, renewables, construction, and industrial equipment. Engineered Structures produces titanium ingots and mill products for aerospace and defense applications as well as produces aluminum forgings, nickel forgings, and aluminum machined components. Forged Wheels provides forged aluminum wheels and related products for heavy-duty trucks and commercial transportation.
- Howmet operates 62 facilities in 11 different countries (primarily the US and the UK) and receives the majority of its revenue from the US and Europe.
Risk & Catalysts
AS OF 01 Aug 2025Aerospace industry is still going strong even as there are signs of a potential slowdown. Domestic travel boom significantly benefited narrowbody business while international travel supporting the next stage for widebody recovery.
However, there are signs that passenger demand may start to falter- at least domestically in the US- and we’ll be tracking how much of the booming OE demand will be realized over the next few years. .
Increased energy demand driven by the AI boom will be driving higher volumes and demand for HWM’s portfolio of IGT products.
Forged wheels segment faces persistent headwinds from the still-weak trucking industry. However, HWM has an edge in the segment thanks to its lightweight products.
Tariffs impacts appear to be minimal thanks to the ability to pass the costs to customers.
Key Metric
AS OF 01 Aug 2025| $ mn | Y22 | Y23 | Y24 | LTM 2Q25 |
|---|---|---|---|---|
| Revenue | 5,663 | 6,640 | 7,430 | 7,721 |
| EBITDA | 1,276 | 1,508 | 1,914 | 2,143 |
| EBITDA Margin | 22.2% | 23.0% | 26.8% | 28.7% |
| EBITDA-CAPEX-INT % of Revenues | 60.2% | 64.4% | 75.9% | 81.5% |
| Total Debt | 4,162 | 3,706 | 3,315 | 3,258 |
| Net Debt | 3,371 | 3,096 | 2,751 | 2,713 |
| Net Leverage | 2.6x | 2.1x | 1.4x | 1.3x |
CreditSight View Comment
AS OF 18 Sep 2025Howmet Aerospace delivered a strong Q2 2025 with revenue up 9% and adjusted EBITDA up 22% year-over-year, supported by robust aerospace and industrial demand. All segments met or exceeded expectations for revenue and adjusted EBITDA, with notable outperformance in Engine Products and margin expansion across the portfolio. Management raised full-year 2025 guidance for revenue, adjusted EBITDA, and free cash flow, reflecting continued operational momentum and end-market strength. Balance sheet metrics improved further as leverage declined, supported by higher EBITDA, steady free cash flow, and ongoing debt reduction alongside increased capital returns. We reiterate our Outperform view and continue to expect rating agency upgrades to low A ratings as Howmet’s credit profile strengthens.
Recommendation Reviewed: September 18, 2025
Recommendation Changed: March 02, 2022
Featured Issuers
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Fundamental View
AS OF 31 Jul 2025Relative to food-oriented peers, KDP benefits from exposure to faster growing, higher margin beverage & coffee categories. However, coffee categories are exposed to underlying commodity swings; coffee is currently experiencing an inflationary cycle.
Management has adopted a more conservative posture on leverage and reduced its target by half a turn to 2.5x or lower. The reduced leverage target implies roughly a full turn of improvement from current levels in the mid-3x area.
Despite the current emphasis on leverage reduction, management has maintained that M&A remains a longer-term priority. Still, we are comfortable with KDP credit and favor taking on any spread pickup opportunities over F&B peers.
Business Description
AS OF 31 Jul 2025- KDP is the result of a July 2018 merger between Dr Pepper Snapple and Keurig Green Mountain. The merger combined a traditional soft drinks company (DPS) with a faster growing coffee platform that includes the market's leading single serve brewing system.
- The merger was backed by JAB Holdings via its affiliate, Maple Holdings BV. While JAB has trimmed its stake in recent periods, it still controls ~16% of the shares.
- KDP recorded $15.4 bn in 2024 net sales with adjusted EBITDA of $4.5 bn. The business is heavily concentrated in North America, and results are reported across three operating segments: U.S. Refreshment Beverages (61% of 2024 sales), U.S. Coffee (26% of sales), and International (13.0% of sales).
- Examples of KDP's key brands include Dr Pepper, Keurig, Snapple, Canada Dry, 7Up, Mott's, and A&W. The company also partners with other leading coffee brands from various producers via licensing and manufacturing agreements for K-cups.
Risk & Catalysts
AS OF 31 Jul 2025Management has historically guided to M&A as a key capital allocation priority, but recent deal activity has been biased toward bolt-on opportunities and management emphasized integrating recently purchased assets while bringing leverage down to the 2.5x area.
KDP has exposure to elevated input costs, particularly for green coffee beans. KDP took pricing in coffee, and is expecting some elasticity, but they plan to management to stable profit dollars, and could seek to raise prices further in 2025.
Given the increased value-seeking mindset of consumers, KDP could see a tradedown benefit if coffee prices rise across the board.
Key Metric
AS OF 31 Jul 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue | 12,683 | 14,057 | 14,814 | 15,351 | 15,759 |
| EBITDA | 3,908 | 3,932 | 4,189 | 4,521 | 4,614 |
| EBITDA Margin | 30.8% | 28.0% | 28.3% | 29.5% | 29.3% |
| EBITDA-CAPEX-INT % of Revenues | 23.5% | 20.5% | 21.7% | 21.6% | 22.3% |
| Total Debt | 12,024 | 12,104 | 13,308 | 15,595 | 15,927 |
| Net Debt | 11,457 | 11,569 | 13,041 | 15,085 | 15,418 |
| Net Leverage | 2.9x | 2.9x | 3.1x | 3.3x | 3.3x |
| EV / EBITDA | 16.3x | 15.8x | 14.2x | 13.0x | 13.1x |
CreditSight View Comment
AS OF 26 Aug 2025KDP has signed a definitive agreement to acquire JDE Peet’s for $22+ bn. The news marks a stark change in the leverage outlook for the company, as management had most recently conveyed a 2.5x net leverage target. KDP intends to finance the deal entirely with cash, using new debt and existing cash. PF net leverage based on forward EBITDA is expected to be 5.2x. Management also plans to spin-off a standalone global CoffeeCo later in 2026 (vs a 1H26 merger close). The company will stay IG, but the credit profile will be firmly low-BBB in our view, and we think spreads should trade at least in line with J.M. Smucker (Baa2/BBB/NR).
Recommendation Reviewed: August 26, 2025
Recommendation Changed: August 25, 2025
Featured Issuers
Bank of Philippine Islands
SK Hynix
Hyundai Motor