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THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
THE BASICS
Investment Tips Explainers Retirement
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
948 x 535 px AdobeStock_433552847
Economic Updates
Monthly Economic Update: Fed cuts incoming   
June 30, 2025 DOWNLOAD
equities-3may23-2
Consensus Pricing
Consensus Pricing – June 2025
June 25, 2025 DOWNLOAD
Two people discussing a chart on a tablet
Economic Updates
Policy Rate Update: Dovish BSP Narrows IRD 
June 19, 2025 DOWNLOAD
View all Reports

Sector: Media and Telecommunications

Bonds Market Movements Top Picks Issuer List
  • Top Picks
  • JD.com
Sovereign Bonds

JD.com

  • Sector: Media and TelecommunicationsTechnology
  • Sub Sector: Technology
  • Country: China
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Fundamental View

AS OF 11 Jun 2025

  • We maintain our Market perform on JD post its decent 1Q25 results; topline growth accelerated, EBITDA margin expanded and gross debt metrics improved, but free operating cash flow turned more negative on increased working capital investments which led to a contraction in net cash. We expect JD’s debt metrics to marginally improve over the next 12 months, with topline growth supported by the domestic stimulus policies, lower EBITDA margin on wider losses for its food delivery expansion, healthy FOCF which should cover its shareholder rewards, flat net cash to YE24, and steady gross leverage. We think its $ bonds trades fair compared to its Asia A/A- corporate and China tech peers, and has likely priced in its stable credit outlook and potential rating upgrade by S&P.

Business Description

AS OF 11 Jun 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 2024.
  • JD has 3 operating segments, namely (1) JD Retail (83% of 1Q25 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 (15%) which includes both internal and external logistic businesses; and (3) New businesses (2%) which consist of Dada, JD Property, Jingxi and overseas businesses.
  • JD had a market capitalization of RMB 353.0 bn as of 10 June 2025.

Risk & Catalysts

AS OF 11 Jun 2025
  • While 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 11 Jun 2025
RMB mn FY21 FY22 FY23 FY24 LTM 1Q25
Debt to Book Cap 12.2% 19.2% 18.8% 22.3% 22.1%
Debt/Total Equity 13.8% 23.7% 23.1% 28.7% 28.3%
Debt/Total Assets 6.9% 10.9% 10.9% 12.9% 12.9%
Gross Leverage 1.8x 1.9x 1.5x 1.7x 1.6x
Interest Coverage 16.1x 16.3x 15.5x 18.5x 19.5x
EBITDA Margin 2.0% 3.3% 4.1% 4.6% 4.7%
Note: Difference between reported EBITDA and adjusted EBITDA mainly due to operating lease costs. JD held a net cash position since FY17.
Scroll to view columns right arrow

CreditSight View Comment

AS OF 14 May 2025

We maintain our Market perform on JD post its decent 1Q25 results; topline growth accelerated, EBITDA margin expanded and gross debt metrics improved, but free operating cash flow turned more negative on increased working capital investments which led to a contraction in net cash. We expect JD’s debt metrics to marginally improve over the next 12 months, with topline growth supported by the domestic stimulus policies, lower EBITDA margin on wider losses for its food delivery expansion, healthy FOCF which should cover its shareholder rewards, flat net cash to YE24, and steady gross leverage. We think its $ bonds trades fair compared to its Asia A/A- corporate and China tech peers, and has likely priced in its stable credit outlook and potential rating upgrade by S&P.

Recommendation Reviewed: May 14, 2025

Recommendation Changed: November 21, 2022

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Korea Gas Corp.

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SCBTB 3.9 24
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Bonds Market Movements Top Picks Issuer List
  • Top Picks
  • Baidu
Sovereign Bonds

Baidu

  • Sector: Media and TelecommunicationsTechnology
  • Sub Sector: Technology
  • Country: China
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Fundamental View

AS OF 10 Jun 2025
  • We maintain our M/P on Baidu post its uninspiring 1Q25 results; topline growth was ahead of expectation on strong AI cloud demand, but EBITDA margin fell on a weaker revenue mix, FOCF turned negative on higher AI investments, debt metrics weakened, and net cash contracted. We expect a modest deterioration in Baidu’s debt metrics compared to YE24. We continue preferring Alibaba and Tencent over Baidu among A-rated China tech credits. We like the stronger balance sheet, larger scale, stronger business positions, and better credit outlook of Alibaba and Tencent. Baidu trades only 3-8 bp wider than Alibaba and Tencent which we view as rich given the limited improvement in its debt metrics over the next 12 months. For investors looking for exposure in Baidu, we prefer its Apr-2030.

Business Description

AS OF 10 Jun 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 (78% of 1q25 revenues) which provides search-based, feed-based and other online marketing services (total: 53% of 3Q24 revenues), as well as products and services from new AI initiatives (29% 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 223.4 bn as of 10 June 2025.

Risk & Catalysts

AS OF 10 Jun 2025
  • Any 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 10 Jun 2025
RMB bn FY21 FY22 FY23 FY24 LTM 1Q25
Debt to Book Cap 29.7% 28.5% 25.0% 22.5% 26.7%
Debt/Total Equity 42.2% 39.8% 33.4% 29.0% 36.4%
Debt/Total Assets 24.1% 23.4% 20.8% 18.5% 22.5%
Gross Leverage 3.3x 2.8x 2.2x 2.0x 2.6x
Interest Coverage 8.2x 11.4x 12.1x 13.8x 13.5x
EBITDA Margin 22.6% 26.8% 29.2% 29.3% 28.9%
Baidu has historically maintained a net cash position. Year-end: 31 December.
Scroll to view columns right arrow

CreditSight View Comment

AS OF 22 May 2025

We maintain our M/P on Baidu post its uninspiring 1Q25 results; topline growth was ahead of expectation on strong AI cloud demand, but EBITDA margin fell on a weaker revenue mix, FOCF turned negative on higher AI investments, debt metrics weakened, and net cash contracted. We expect a modest deterioration in Baidu’s debt metrics compared to YE24. We continue preferring Alibaba and Tencent over Baidu among A-rated China tech credits. We like the stronger balance sheet, larger scale, stronger business positions, and better credit outlook of Alibaba and Tencent. Baidu trades only 3-8 bp wider than Alibaba and Tencent which we view as rich given the limited improvement in its debt metrics over the next 12 months. For investors looking for exposure in Baidu, we prefer its Apr-2030.

Recommendation Reviewed: May 22, 2025

Recommendation Changed: August 31, 2022

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Recommended Issuers

Who We Recommend

Korea Gas Corp.

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Macquarie Bank

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Siam Commercial Bank

Bond:
SCBTB 3.9 24
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Bonds Market Movements Top Picks Issuer List
  • Top Picks
  • PLDT
Sovereign Bonds

PLDT

  • Sector: Media and TelecommunicationsTechnologyTechnology Media and Telecommunications
  • Sub Sector: Telecommunications
  • Country: Philippines
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Fundamental View

AS OF 19 May 2025
  • PLDT’s FY24 results were stable as expected; we see a modestly improving FY25 credit outlook aided by resilient EBITDA growth and residual PHP 11 bn of tower sales, which could offset persisting high capex.

  • A potential stake sale of the data center business could drive further deleveraging.

  • While the spillover of a PHP 33 bn capex overrun to FY25 could weigh on free cash flows, we draw mild comfort that it was likely not due to fraud but rather a management misstep.

Business Description

AS OF 19 May 2025
  • PLDT is a leading telecom operator in the Philippines, competing alongside its main rival Globe Telecom in a predominant duopoly.
  • PLDT provides 2G/3G/4G mobile, fixed-line, broadband, enterprise data, and other digital services to retail and corporate customers.
  • PLDT operates through 2 main business segments – “Wireless Services” and “Fixed Line Services”.
  • Its “Wireless” segment offers mobile voice, mobile SMS, mobile data and mobile broadband services to retail customers in the Philippines. These services are marketed under the “Smart Postpaid”, “Smart Prepaid”, "Sun Postpaid" and “TNT Prepaid” brands.
  • Its “Fixed Line Services” segment provides fixed line voice, corporate data and home broadband services to retail and corporate customers in the Philippines.
  • PLDT commercially launched 5G services on a small-scale basis in Jul-2020. It currently has over 3,000 5G sites nationwide.
  • PLDT maintains dominant market shares in the mobile, fixed line voice, and the home broadband spaces.
  • PLDT is backed by three established corporate groups, namely First Pacific (~15% stake), NTT Corporation (~12% stake) and JG Summit Holdings (~7% stake).

Risk & Catalysts

AS OF 19 May 2025
  • Aggressive expansion by new entrant DITO over the next 2-4 years could chew away at PLDT’s market share and restrain recoveries in average revenues per user (ARPU).

  • PLDT incurs significant capex that has restrained improvements in its leverage metrics and free cash flows. This is worsened by a recent capex overrun that has induced mild corporate governance uncertainties (though these have eased in recent months).

  • Consistently high dividend payouts could worsen PLDT’s already negative free cash flows.

  • PLDT is exposed to $/PHP depreciation risks ($300 mn 2050 bond is fully unhedged).

Key Metric

AS OF 19 May 2025
PHP bn FY22 FY23 FY24 1Q24 1Q25
Debt to Book Cap 71.9% 73.3% 74.2% 74.1% 74.3%
Net Debt to Book Cap 65.7% 69.3% 72.0% 70.7% 71.2%
Debt/Total Equity 256.2% 273.9% 287.5% 286.6% 288.4%
Debt/Total Assets 46.8% 49.6% 53.8% 49.0% 53.8%
Gross Leverage 2.9x 2.9x 3.0x 2.9x 3.0x
Net Leverage 2.7x 2.8x 2.9x 2.7x 2.9x
Interest Coverage 7.4x 6.5x 6.1x 6.4x 5.9x
EBITDA Margin 48.7% 49.1% 51.1% 52.0% 51.7%
Scroll to view columns right arrow

CreditSight View Comment

AS OF 19 May 2025

We have a Market perform recommendation on PLDT and would avoid its 2050 bond. PLDT 2031 trades fairly to Globe 2030, Axiata 2030, and Bharti 2031. We do not like the PLDT 2050 that provides a low spread pickup of just 4 bp wider versus the PLDT 2030. We are comfortable with PLDT’s sturdy credit profile aided by a resilient broadband business and tower sales, cushioning high capex and dividends. A minority stake sale of its data center business is also credit positive. Corporate governance fears have also eased post its capex overrun in end-2022. We are watchful of strong competition in the mobile space due to DITO’s ramp up.

Recommendation Reviewed: May 19, 2025

Recommendation Changed: May 31, 2022

see more issuers DOWNLOAD PDF
Recommended Issuers

Who We Recommend

Korea Gas Corp.

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Macquarie Bank

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Siam Commercial Bank

Bond:
SCBTB 3.9 24
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