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Archives: CreditSights Issuer List
Baidu
- Sector: Media and TelecommunicationsTechnology
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 21 Aug 2025We lowered our recommendation on Baidu to Underperform from Market perform post its weak 2Q25 results; revenues contracted and EBITDA margin fell sharply due to low advertising monetization rate; free operating cash flow was negative for a second consecutive quarter, and net cash narrowed; we expect Baidu’s credit outlook to further weaken over the next 12 months and we see reduced rating headroom at Moody’s as we expect gross leverage to trend higher in 2H25 to 2.8x. We view its bonds as rich compared to A-rated China tech and Asia corporate peers; for example, Baidu trades only 3-5 bp tighter than Alibaba and Tencent, and it is 11/6 bp tighter than Asia A- and A rated corporates; as a gauge, the average spread differential is 23 bp for A3 and A1 rated Asian $ bonds.
Business Description
AS OF 21 Aug 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 (80% of 2Q25 revenues) which provides search-based, feed-based and other online marketing services (total: 50% of revenues), as well as products and services from new AI initiatives (31% 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 238.4 bn as of 21 August 2025.
Risk & Catalysts
AS OF 21 Aug 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 21 Aug 2025| RMB bn | FY21 | FY22 | FY23 | FY24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 29.7% | 28.5% | 25.0% | 22.5% | 24.4% |
| Debt/Total Equity | 42.2% | 39.8% | 33.4% | 29.0% | 32.2% |
| Debt/Total Assets | 24.1% | 23.4% | 20.8% | 18.5% | 20.4% |
| Gross Leverage | 3.3x | 2.8x | 2.2x | 2.0x | 2.5x |
| Interest Coverage | 8.2x | 11.4x | 12.1x | 13.8x | 12.8x |
| EBITDA Margin | 22.6% | 26.8% | 29.2% | 29.3% | 27.2% |
CreditSight View Comment
AS OF 19 Nov 2025We maintain our Underperform recommendation on Baidu (A3/NR/A; Stb/NR/Neg) following its weak 3Q25 results; which reported a sharper decline in revenues as its search engine revamp pressured its online ad segment; EBITDA margin fell, FOCF remained negative, and debt metrics weakened. We expect a marginal improvement to Baidu’s credit metrics in FY26, but to remain weak compared to historical levels and we see reduced rating headroom from Moody’s and Fitch. Baidu trades 7-10 bp tighter on average than Asia A- and A rated corporates which we view as rich. Compared to Alibaba and Tencent, we view Baidu as rich as it trades only ~3-13 bp wider, which is tighter than the average spread differential of 26 bp for A3 and A1 rated Asian $ bonds.
Recommendation Reviewed: November 19, 2025
Recommendation Changed: August 21, 2025
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Country Overview
AS OF 19 Aug 2025- Hydrocarbon-driven economy: Qatar’s economy is primarily fueled by its vast reserves of oil and natural gas. As the world’s largest exporter of liquefied natural gas (LNG), the country’s economic health and government revenues are highly dependent on global energy prices. This resource has endowed Qatar with one of the world’s highest per capita incomes and significant fiscal strength.
- Vision for diversification: Under its Qatar National Vision 2030, the country is actively working to reduce its reliance on hydrocarbons. The government is investing heavily in developing a knowledge-based economy and promoting sectors like finance, logistics, and tourism to create more sustainable and diversified growth.
- Robust Fiscal Position: Due to high energy prices, Qatar has consistently maintained substantial fiscal and current account surpluses. These surpluses have allowed the government to build significant financial reserves and sovereign wealth, providing a strong economic buffer against external shocks and funding major infrastructure projects.
Macro Fundamentals
AS OF 19 Aug 2025- Pegged currency and monetary policy. The Qatari riyal is pegged to the US dollar, which means the Qatar Central Bank's monetary policy decisions are closely linked to those of the US Federal Reserve. This policy provides a stable exchange rate and helps anchor inflation expectations.
- Strong twin surpluses. Qatar’s external position is exceptionally strong, characterized by persistent and large current account and fiscal surpluses. While these surpluses have moderated from their 2022 peaks as energy prices have stabilized, they are projected to remain in positive territory, ensuring financial stability.
- Significant public and private investment. Both public and private sectors are focused on large-scale infrastructure and development projects. Key investments, such as the massive North Field East LNG expansion and continued growth in the services sector (particularly post-World Cup), are central to the country's economic strategy.
CreditSight View Comment
AS OF 24 Feb 2026Recommendation Reviewed:
Recommendation Changed:
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Fundamental View
AS OF 25 Jul 2025IBK benefits from a legally binding solvency guarantee from the Korean government and is viewed as a Korean quasi-sovereign issuer. The bank is listed, but remains majority state-owned. Previous governments had proposed privatizing it, but subsequent governments scrapped these plans. The government intends to keep its stake above 50%, and wants IBK to focus on lending to SMEs and provide earlier stage investment capital.
IBK manages the difficult feat of combining its policy role to support Korean SMEs with performance that compares creditably with Korean commercial banks.
Business Description
AS OF 25 Jul 2025- IBK was established under its own Act in 1961 to assist the development of Korea's small business sector. It claims a 24% market share in SME lending.
- It was listed in the early 1990s, but was re-nationalised following heavy losses in the Asian economic crisis of the late 1990s. It was re-listed in 2003, and is majority owned by the government which holds 59.5%; the National Pension Scheme holds 5.6%, and other policy banks have small stakes (7.2% by Korea Development Bank and 1.8% by the Export-Import Bank of Korea).
- Under Article 43 of the IBK Act, if the bank incurs losses they should be set against its reserves and "if the reserves are not sufficient the Government shall assume the remaining loss". Although this is a solvency guarantee and not an explicit guarantee for the timely payment of debts, we believe the Korean government will ensure IBK is in a position to make such timely payments.
Risk & Catalysts
AS OF 25 Jul 2025The bank’s ratings are closely tied to the Korean sovereign’s ratings due to its quasi-sovereign status.
Its ratings and its default risk should therefore not be impacted by any deterioration in its financials, provided the government continues to inject new capital when needed, which it is expected to.
Its policy mandate requires it to use at least 70% of its funding for SMEs. Risks are mitigated by its granular SME exposures which are more than 80% secured, including guarantee from state-owned credit guarantee agencies. Korean governments have also always been quick to provide support including capital injections to IBK when needed, with the most recent injection of KRW 1.3 tn during the COVID.
Key Metric
AS OF 25 Jul 2025| KRW bn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| Pre-Provision Operating Profit / Average Assets | 1.30% | 1.49% | 1.59% | 1.39% | 1.34% |
| ROAA | 0.6% | 0.6% | 0.6% | 0.6% | 0.6% |
| ROAE | 9.2% | 9.5% | 8.8% | 8.1% | 8.8% |
| Provisions/Average Loans | 0.34% | 0.50% | 0.67% | 0.52% | 0.44% |
| Nonperforming Loans/Total Loans | 0.85% | 0.85% | 1.05% | 1.34% | 1.37% |
| CET1 Ratio | 11.3% | 11.1% | 11.3% | 11.3% | 11.7% |
| Total Equity/Total Assets | 6.92% | 6.79% | 7.10% | 7.25% | 7.18% |
| NIM | 1.51% | 1.78% | 1.79% | 1.70% | 1.59% |
CreditSight View Comment
AS OF 16 Jun 2025IBK is not wholly government owned – 59.5% direct government ownership, 7.2% KDB and 1.8% KEXIM – but is a policy bank benefiting from a Korean government solvency guarantee. For a policy bank it also has a fairly good track record and manages the difficult feat of combining its policy role to support Korean SMEs with performance that compares creditably with Korean commercial banks. As the leading lender to Korea’s medium and small businesses, IBK plays a key role in the country’s economy, enhanced by the longstanding objective of numerous administrations to achieve a more diversified economy less reliant on the “chaebol”. Successive Korean governments have always been quick to provide support including capital injections to the policy banks when needed.
Recommendation Reviewed: June 16, 2025
Recommendation Changed: March 17, 2017
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Search topics about wealth insights and investments.JG Summit Holdings, Inc.
- Bond: JGSPM 4.125 30
- Indicative Yield-to-Maturity (YTM): 4.37%
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Overview
AS OF 24 Jul 2025- JG Summit is a highly diversified Philippine conglomerate with market-leading positions in key sectors, serving a growing middle class in the Philippines and across Asia.
- The company benefits from a synergistic ecosystem across its strategic business units, ecosystem plays, and core investments, which drives value creation.
- A solid financial position and a strong management team underpin its long-term growth objectives and resilience amidst market fluctuations.
CreditSight View Comment
AS OF 24 Feb 2026Recommendation Reviewed:
Recommendation Changed:
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Search topics about wealth insights and investments.The Export-Import Bank of Korea
- Sector: Financial Services
- Sub Sector: Banks
- Region: Korea
- Bond: EIBKOR 5.125 33
- Indicative Yield-to-Maturity (YTM): 4.55%
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Fundamental View
AS OF 23 Jul 2025KEXIM is a pure policy bank that is directly and indirectly wholly owned by the government of the Republic of Korea, which is obliged under Article 37 of the Export-Import Bank of Korea Act to fund any losses that cannot be covered by the bank’s reserves.
While this is a solvency guarantee and does not explicitly guarantee the timely repayment of debt, we view it as inconceivable that the Korean authorities would fail to provide KEXIM with support in a timely manner, should this be needed, given its crucial policy role and close government links.
Business Description
AS OF 23 Jul 2025- KEXIM was set up in 1976 to support Korean companies in their overseas business through export credit guarantee programs, as well as providing finance for imports and for overseas investment. It provides funding for both short term trade and long term investment, and manages two government-entrusted funds: the Economic Development Cooperation Fund (EDCF), a Korean official development assistance program, and the Inter-Korean Cooperation Fund (IKCF), an economic cooperation program to promote exchanges with North Korea. It is also a conduit through which the government doled out COVID-19 assistance to affected companies.
- Till 2030, KEXIM aims to preferentially focus on seven sectors (hydrogen energy, wind and solar power, rechargeable battery and energy storage systems (ESS), future mobility, 5G and next-generation semiconductors, pharmaceutical and healthcare, and digital technology and cultural content) which are considered new growth drivers of the Korean economy. It has historically focused on the shipbuilding and engineering & construction industries.
- KEXIM is 100% owned by the Korean government: 76% directly and the remainder through stakes held by the Bank of Korea (7%) and Korea Development Bank (17%). In contrast to peer policy banks IBK and KDB, KEXIM has remained more consistently a policy bank but its role has been adjusted to ensure it complements rather than competes with the Korean commercial banks.
Risk & Catalysts
AS OF 23 Jul 2025Previous Korean governments have made moves to privatise the other policy banks, but KEXIM has retained its policy bank role and government ownership, which are not likely to change.
Korea’s shipbuilders have long been the largest users of KEXIM’s services. Losses on exposure to the sector, in particular Daewoo Shipbuilding (DSME), pushed KEXIM into the red in 2016 but the government injected capital and its condition has recovered.
Together with KDB, KEXIM has played a key role in helping corporate Korea survive the COVID-19 induced crisis.
Key Metric
AS OF 23 Jul 2025| KRW bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Pre-Impairment Operating Profit / Average Assets | 1.2% | 1.1% | 1.1% | 1.1% | 1.1% |
| ROAA | 0.1% | 0.5% | 0.4% | 0.6% | 0.8% |
| ROAE | 0.7% | 3.2% | 2.7% | 4.7% | 5.2% |
| Provisions/Average Loans | 1.2% | 0.5% | 0.8% | 0.3% | 0.1% |
| Nonperforming Loans/Total Loans | 1.8% | 1.9% | 1.2% | 0.7% | 0.9% |
| CET1 Ratio | 13.4% | 13.3% | 11.8% | 12.9% | 13.9% |
| Total Equity/Total Assets | 14.8% | 15.1% | 12.6% | 14.3% | 16.3% |
| Net Interest Margin (NIR/Ave Assets) | 0.9% | 0.9% | 0.9% | 0.7% | 0.6% |
CreditSight View Comment
AS OF 06 Jan 2026KEXIM is a wholly government owned policy bank benefiting from a Korean government solvency guarantee. It plays a key role in financing large-ticket exports in particular ships and large-scale overseas engineering projects. Its credit exposures include some industry and borrower concentrations especially to Korea’s shipbuilders and its financial performance has at times suffered. But the Korean government has always acted in a timely manner to endure its solvency, and with this strong backing we view it as a sound credit. We view its secondary levels as in line with where we would expect it to trade, and so continue with our Market perform recommendation.
Recommendation Reviewed: January 06, 2026
Recommendation Changed: September 22, 2020
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Search topics about wealth insights and investments.Korea Electric Power Corp.
- Sector: Energy
- Sub Sector: Utilities
- Region: Korea
- Bond: KORELE 5.5 28
- Indicative Yield-to-Maturity (YTM): 4.858%
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Fundamental View
AS OF 07 Jul 2025- KEPCO is Korea’s only fully integrated electricity utility and is considered a quasi-sovereign credit, with its financial strength anchored by a very high level of government support stemming from its essential role in securing the nation’s power supply.
- In FY24, KEPCO’s credit profile improved significantly due to higher tariffs and stabilizing fuel costs, driving strong rebounds in revenue, EBITDA margin, and cash flow. Credit metrics strengthened, with total debt/EBITDA and net debt/EBITDA improving to 6.7x/6.6x. Although capex remains substantial and continues to keep debt elevated, the stronger operating performance has provided a cushion. These factors, combined with KEPCO’s critical policy function and the strong likelihood of government support, underpin its solid credit standing.
Business Description
AS OF 07 Jul 2025- KEPCO is a quasi-sovereign credit and the sole integrated electric utilities company in Korea. It is majority-owned by the Korean government, which maintains at least a 51% stake as stipulated by law, with shares listed on both the Korea Exchange and the New York Stock Exchange.
- It is South Korea’s leading electricity utility, holding an effective monopoly over the country’s transmission and distribution networks and acting as the primary power generator. Through its six wholly owned generation subsidiaries - Korea Hydro & Nuclear Power (KHNP), Korea South-East Power (KOEN), Korea Western Power (KOWEPO), Korea East-West Power (EWP), Korea Midland Power (KOMIPO), and Korea Southern Power (KOSPO), KEPCO supplies around two-thirds of Korea’s electricity and manages more than half of the nation’s total power capacity. KHNP is the sole nuclear power generation company in Korea. On a consolidated basis, electricity transmission & distribution accounts for over 95% of KEPCO's annual revenues.
Risk & Catalysts
AS OF 07 Jul 2025- Key risks to KEPCO’s standalone credit profile include: 1) higher-than-expected fuel costs due to continued increase of international prices of coal, natural gas and oil as well as a significant depreciation of the KRW against the $; (2) inability to pass through high fuel costs due to insufficient or delayed tariff adjustment; and (3) higher-than-expected capex and investments related to Korea’s green transition. However, we do not foresee these risks to materially impair KEPCO’s ability to access funding, credit rating and overall credit profile as we expect KEPCO to continue receiving an extremely high level of support from the Korean government.
- KEPCO’s exposure to nuclear power operations and coal-fired power generation may post ESG concerns for investors with an ESG mandate. The company also faces challenges from Korea’s push for decarbonization, with tightening environmental regulations and a planned reduction in coal-fired power potentially increasing compliance costs and execution risks during the energy transition.
Key Metric
AS OF 07 Jul 2025| KRW bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 55.3% | 60.1% | 76.9% | 80.5% | 78.9% |
| Net Debt to Book Cap | 54.1% | 58.7% | 75.3% | 78.4% | 77.8% |
| Debt/Total Equity | 1.2x | 1.5x | 3.3x | 4.1x | 3.7x |
| Debt/Total Assets | 43.0% | 46.7% | 59.6% | 64.3% | 62.6% |
| Gross Leverage | 5.6x | 16.5x | -6.9x | 18.2x | 6.9x |
| Net Leverage | 5.5x | 16.1x | -6.8x | 17.7x | 6.8x |
| Interest Coverage | 7.8x | 3.1x | -7.2x | 1.9x | 4.8x |
| EBITDA Margin | 26.5% | 9.8% | (28.3%) | 9.6% | 23.9% |
CreditSight View Comment
AS OF 06 Feb 2026We maintain our Outperform recommendation on Korea Electric Power Corporation (KEPCO; Aa2/AA/AA-; Sta/Sta/Sta) following our recent issuer trip in December; we view KEPCO as more attractive compared to Chinese A-rated utilities and national oil companies, underpinned by its stronger government support as the sole integrated utility and grid operator in South Korea; we recommend it for investors looking for defensive carry in the Asia corporate space.
Recommendation Reviewed: February 06, 2026
Recommendation Changed: July 24, 2023
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Search topics about wealth insights and investments.Pertamina
- Sector: Energy
- Sub Sector: Oil and Gas
- Region: Indonesia
- Bond: PERTIJ 3.1 30
- Indicative Yield-to-Maturity (YTM): 5.339%
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Fundamental View
AS OF 18 Jun 2025- Pertamina enjoys very strong linkages with the Government of Indonesia (GoI) and is assured of extraordinary support in times of distress.
- Lower expected Brent crude prices YoY could weigh on its upstream margins and overall EBITDA (given the upstream business accounts for >65% of consolidated EBITDA).
- Although leverage typically remains low, Pertamina incurs large capex spending that could pressure its free cash flow generation.
- High persisting dividend outflows could restrain free cash flow improvements.
Business Description
AS OF 18 Jun 2025- Pertamina is involved in a broad range of upstream and downstream oil, gas, geothermal and petrochemical operations.
- In the upstream sector, it engages in the exploration, development and production and supply of crude oil, natural gas and geothermal energy.
- As for the downstream sector, the company carries out refining, marketing and distribution of oil, gas, fuel products and petrochemical and other non-fuel products.
- As of 31 December 2024, its total proved oil reserves stood at ~1,394 mmbbl (mn barrels of oil) and gas reserves stood at ~1,058 mmboe (mn barrels of oil equivalent). Its average daily oil and gas production was ~1,045,000 boe per day in FY24. The company owns and operates 6 refineries in Indonesia.
- Under the Public Service Obligation (PSO) mandate, Pertamina is responsible for providing certain grades of motor gasoline, automotive diesel oil, kerosene and LPG at subsidized prices. The subsidized retail price is often times lower than the cost of production, creating a shortfall, for which it receives reimbursements from the GoI.
Risk & Catalysts
AS OF 18 Jun 2025- Pertamina’s profitability is materially affected by volatility in oil & gas prices. Prolonged periods of low oil prices could hurt upstream earnings that form the bulk of overall EBITDA (>65%).
- As retail prices of certain fuel products are regulated, realized prices may be below its cost of sales.
- Pertamina has to initially absorb the shortfall between the regulated retail price and the cost of producing and distributing certain fuel products. If the price of crude oil exceeds the price ceiling set by the GoI, the company may receive insufficient subsidy reimbursements.
- Capex typically remains elevated and which pressurizes its free cash flow generation.
Key Metric
AS OF 18 Jun 2025| $ mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 38.5% | 41.2% | 42.1% | 37.6% | 34.9% |
| Net Debt to Book Cap | 18.9% | 21.9% | 12.5% | 8.5% | 12.3% |
| Debt/Total Equity | 62.5% | 70.0% | 72.7% | 60.4% | 53.6% |
| Debt/Total Assets | 28.3% | 29.9% | 30.8% | 27.4% | 26.3% |
| Gross Leverage | 2.4x | 2.5x | 1.9x | 1.9x | 2.2x |
| Net Leverage | 1.2x | 1.3x | 0.6x | 0.4x | 0.8x |
| Interest Coverage | 7.8x | 8.7x | 11.2x | 8.9x | 7.5x |
| EBITDA Margin | 19.9% | 16.0% | 16.7% | 17.7% | 14.3% |
CreditSight View Comment
AS OF 08 Dec 2025We maintain our Market perform recommendation on Pertamina at the issuer level with a continued preference for its 2031, 2041, and 2042 bonds. We think current spread levels are fair given the downside risk of the O&G sector’s cyclicality and persisting policy uncertainty from Indonesia’s new sovereign wealth fund Danantara. That said, we continue to view Pertamina as a safe-haven pick and remain comfortable with Pertamina’s full state-ownership, timely fuel subsidy and compensation from the Indonesian government, positive free cash flow generation, robust credit metrics and our expectation for Pertamina’s strategic policy role to sustain even amidst macro headwinds and Danantara.
Recommendation Reviewed: December 08, 2025
Recommendation Changed: May 16, 2023
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Fundamental View
AS OF 05 Jun 2025We expect the credit profile of Sinopec, which is one of the three Chinese national oil companies (NOCs) to continue to be underpinned by its strategic role in China’s energy security and the resulting strong government support.
We expect Sinopec’s standalone credit profile to remain supported in FY24 by resilient refined oil demand and improving demand for chemical products as industrial activities pick up and the destocking trend ends.
To note, we use the financials of HKEx listed Sinopec Corp (386.HK) as a proxy for the credit profile of its parent, the obligor of the outstanding $ bonds (BBG: SINOPE).
Business Description
AS OF 05 Jun 2025- Sinopec Group is a Chinese integrated oil and gas (O&G) company and is one of the largest globally & domestically. In 3Q24, 56.4% of Sinopec Corp' external revenues came from marketing and distribution (i.e. retail and direct sales of refined oil), 13.9% from chemicals, 5.1% from refining, and 5.0% from E&P. Corporate and others segment accounted for the remaining 19.6% of sales revenue, consisting of import and export business, R&D and managerial activities.
- The refining segment purchases crude oil from third parties as well as the E&P segment of the company, and processes crude oil into refined petroleum product. Most of the gasoline, diesel and kerosene are sold internally to the marketing and distribution segment of the company; part of the chemical feedstock is sold internally to the chemical segment, and the other refined petroleum products are sold externally to both domestic and overseas customers. The marketing and distribution segment purchases refined oil products from the refining segment and third parties, and mainly distributes to domestic customers via its wholesale and retail networks.
- In 9M24, Sinopec's total oil and gas output was 386.06 mn barrels of oil equivalent, up 2.6% YoY; this included 190.42/20.87 mmbbls (+1.2%/-6.6%) of domestically produced/overseas crude oil, as well as 1,084 bcf of natural gas (+5.6% YoY). The average realized price of its crude oil and natural gas was $76.6/bbl (+1.1% YoY)and $7.48/thousand cubit feet (+5.4% YoY)respectively.
Risk & Catalysts
AS OF 05 Jun 2025Risks: Lower-than-expected domestic sales of refined oil and chemical products due to a severe economic downturn, higher-than-expected crude oil and gas feedstock costs resulted from geopolitical tensions, elevated inventory losses due to tumbling oil & gas prices, and large capex overrun result in a weaker standalone credit profile. However, we expect the strong government support to offset these downside risks. US sanction related headline risks due to US-China tension and other geopolitical risks.
Catalysts: inflow into China $ bonds as a result of improving China macro outlook and US-China relationship; stronger-than-expected recovery in chemical product demand.
Key Metric
AS OF 05 Jun 2025| RMB bn | FY20 | FY21 | FY22 | FY23 | 3Q24 |
|---|---|---|---|---|---|
| Total Debt/Capitalization | 25.3% | 25.6% | 27.5% | 31.5% | 33.1% |
| Net Debt/Capitalization | 9.4% | 7.6% | 16.3% | 19.8% | 21.4% |
| Total Debt/Total Equity | 33.8% | 34.5% | 38.0% | 46.1% | 49.4% |
| Total Debt/Total Assets | 17.2% | 16.7% | 18.3% | 21.7% | 22.9% |
| Total Debt/EBITDA | 1.5x | 1.2x | 1.5x | 2.0x | 2.3x |
| Net Debt/EBITDA | 0.6x | 0.4x | 0.9x | 1.3x | 1.5x |
| EBITDA/Gross Interest | 16.8x | 20.1x | 16.1x | 14.5x | 14.2x |
| EBITDA Margin | 9.5% | 9.4% | 7.0% | 6.8% | 5.9% |
CreditSight View Comment
AS OF 05 Jun 2025We affirm our Market perform recommendation on Sinopec. A-rated Chinese state-owned enterprises (SOEs), including Sinopec are trading tight due to a lack of new supply and as investors fly to quality amid macro uncertainties in China. We continue to prefer AA-rated Korean quasi-sovereign names for safe carry (like KOROIL, KORGAS, KEPCO) and higher-beta Chinese SOEs for spread pickup.
Recommendation Reviewed: June 05, 2025
Recommendation Changed: May 03, 2021
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Country Overview
AS OF 28 May 2025- Highly Developed Mixed Economy: South Korea boasts a highly developed mixed economy, ranking as the 13th largest globally by nominal GDP and the 4th largest in Asia as of 2025, with a nominal GDP of approximately USD 1.950 trillion.
- Rapid Economic Development: The nation experienced a remarkable economic transformation known as the “Miracle on the Han River”, evolving from an underdeveloped country to a high-income, developed nation in a few decades.
- Global Leader in Key Industries: South Korea is a global leader in sectors such as electronics, telecommunications, automobile production, chemicals, shipbuilding, and steel, with significant investments in research and development (around 4.93% of GDP).
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Search topics about wealth insights and investments.UnionBank of the Philippines
- Sector: Financial Services
- Sub Sector: Banks
- Region: Philippines
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Fundamental View
AS OF 19 May 2025The bank has historically generated higher returns than peers, but it geared its focus significantly towards the retail segment through acquiring Citi’s Philippine retail portfolio in 2022 and organic growth, which brought retail loans to more than half the total book.
Returns have suffered despite the good boost to core revenues, as asset quality deterioration from the riskier growth direction resulted in high credit costs which we have forewarned. Continued rounds of capital infusions from shareholders have thus been required. The reserve cover is maintained relatively thin.
Business Description
AS OF 19 May 2025- UnionBank of the Philippines was incorporated in 1968, and listed on the Philippine Stock Exchange in June 1992. Principal shareholders are Aboitiz Equity Ventures (49.66%), Insular Life (16%), & Social Security System (18%).
- UBP undertook mergers with International Corporate Bank in 1994 and International Exchange Bank in 2006. City Savings Bank (a thrift bank) was purchased in Jan 2013. City Savings received merger approval with PR Savings (a bank engaged in motorcycle, agri-machinery, & teachers' salary loans) in Dec 2018 from the BSP. It acquired the Citi Philippines retail franchise in 2022.
- The loan book is broadly split 38% wholesale loans and 62% retail loans (comprising 34% credit cards, 21% mortgages and 7% salary loans at the parent, 36% teachers loans, salary loans and motorcycle loans by the thrift bank subsidiary, City Savings Bank, and 1% UnionDigital) at Mar-25.
Risk & Catalysts
AS OF 19 May 2025Any rating downgrade of the Philippine sovereign or reduction of shareholding by Aboitiz Equity Ventures would negatively impact UBP.
The bank’s aggressive retail expansion has improved the NIM, but negatively impacted overall profitability because of high credit costs (particularly since 2H23) which we have forewarned. We continue to dislike its focus on riskier retail given the already large loan book exposure. It is now focusing on lower risk, shorter term loans at UnionDigital, but the improvement in credit costs have been slow to come through given fallout from higher risk taking in other segments.
The bank however benefits from good shareholder support; it successfully completed a third stock rights offering of PHP 10 bn in 2Q24 (2023: PHP 12 bn; 2022: PHP 40 bn) to shore up capital. Lower opex from 2Q24 onwards is also aiding the bottomline.
Key Metric
AS OF 19 May 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.60% | 4.80% | 5.50% | 6.00% | 6.30% |
| Reported ROA (Cumulative) | 1.6% | 1.3% | 0.8% | 1.1% | 0.5% |
| Reported ROE (Cumulative) | 11.5% | 9.7% | 5.6% | 6.4% | 2.9% |
| PPP ROA | 2.59% | 2.17% | 2.31% | 3.08% | 2.74% |
| CET1 Ratio | 16.3% | 11.3% | 13.9% | 15.6% | 14.9% |
| Total Equity/Total Assets | 13.5% | 13.6% | 15.3% | 17.1% | 16.8% |
| Gross NPL Ratio | 5.00% | 4.80% | 6.27% | 6.89% | 6.90% |
| Net LDR | 63.1% | 67.4% | 73.8% | 77.3% | 74.6% |
| Liquidity Coverage Ratio | 272% | 148% | 163% | 250% | n/m |
| Net Stable Funding Ratio | 149% | 124% | 124% | 128% | n/m |
CreditSight View Comment
AS OF 19 Aug 2025UBP’s NIM and core revenue generation is strong thanks to its pivot towards higher yielding retail via organic growth and acquiring Citi’s local retail portfolio. However, returns have suffered as the asset quality repercussions which we have forewarned from its aggressive growth strategy towards the risky retail segments have come through, with elevated credit costs since 2H23. It has slowed loan growth but credit costs have not shown signs of stabilisation given a still high appetite for risk. The reserve cover is maintained relatively thin. Continued shareholder support with yet another stock rights offering in 2Q24 has ensured sufficient capital for now. We drop coverage on UBP given the impending maturity of its sole $ bond in Oct-25.
Recommendation Reviewed: August 19, 2025
Recommendation Changed: January 01, 1970
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