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J P 摩根-亚太地区-投资策略-亚洲高收益公司:疯狂奔跑的东方-2-50页.pdf
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J P 摩根-亚太地区-投资策略-亚洲高收益公司:疯狂奔跑的东方-2-50页.pdf
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STRICTLY PRIVATE AND CONFIDENTIAL
Asia Corporate Research
Soo Chong Lim
AC
Varun Ahuja, CFA
AC
(852) 2800-7931 (852) 2800-6038
soo.ch.lim@jpmorgan.com varun.x.ahuja@jpmorgan.com
J.P. Morgan Securities (Asia Pacific) Limited
| February 2019
Asia Credit Research
See end pages for analyst certification and important disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be
aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this
report as a single factor in making their investment decision.
Asia High Yield Corporates
A wild ride in the Orient
Agenda
Page
1 Summary view 1
2 China HY property 3
3 China HY Industrial 26
4 Indian HY corporates 32
5 Indonesian HY corporates 35
Summary view
Executive summary
A wild ride in the Asia credit market in 2018. The JACI HY lost close to 7% of total return at its low point in mid-2018, before a
strong recovery toward the year-end brought full-year total return to -3.5% as a 269bp widening in spreads pushed YTW 300bp
higher to 9.0%. While the recovery has continued well into the new year, valuations for Asia HY remains attractive as its current
yield is still hovering at the upper end of its recent trading range. Given fundamentals are still largely intact except for some weak
spots (e.g. China HY industrials) and technicals are turning more supportive, we see further rooms for compression.
China HY property sector remains the sweet spots. The recent rally has pushed valuations for the front-end closer to fair value,
making the 1-2 year segment more as short-term carry plays. We see better value in the 3-5 years segment given the steepness of
the credit curve. On fundamentals, we expect the physical housing market to slow especially for lower tier cities, but the downside
could be cushioned by more accommodative housing policies. Furthermore, larger developers should continue to gain market share
as consolidation of the industry could accelerate. Remain very selective in China HY industrials as we still see high
idiosyncratic risks. The wild yield chase in 2016-17 had allowed some marginal credits to tap the market. As investors turning
more selective now, some of these names could find some difficulties to refinance their upcoming maturities.
Indonesia HY remain cheap. We expect Indonesia macro to benefit from a more conducive external environment that should filter
to the HY sector. The recent recovery in IDR could continue to underpin recovery for the sector. We still expect some credits to
remain on positive credit trend in particular those in the commodity sector despite some moderation in commodity prices. We like
coal mines (Indika, BUMA and ABM), plantation company (Sawit), consumer names (Gajah), and selected destressed names (Lippo
and Bumi).
Selective in Indian HY as we see better value in other Asia HYs. Supply related technicals should be strong as refinancing
needs remain low. Renewables (e.g. Greenko) provide a “true” diversification from China HY names given that they are stable
domestic-focused credits with long term earnings visibility built into contracts. Next, we have preference for select steel, pharma
credits such as Tata ‘24s, Jubilant ‘21s etc. While not HY, we think Bharti ‘24s looks interesting here and we think investors should
start adding here slowly and more aggressively at wider than Tata ‘24 levels. On the other hand, we are UW on Ved ‘23s and ‘24s
due to structure and leverage concerns and see better value in other Asian commodity names here. Also UW on HMEL ‘27s, DIAL
‘26s due to valuations and preferring GMRL ‘27s, Tata ‘28s rather.
Summary view
1
Asia HY has recovered almost all 2018 losses over the past three months
Valuations remain reasonable as YTW and z-spread are still at the wider end
YTW and z-spread have retraced around 40% of their lost
ground during the selloff in 2018
China HY still offers higher yield and spread than Indonesia
and Indian H despite its shorter tenure and comparable rating
Average
rating
YTW
(%)
(YTD change)
Z-spread to
worst (bp)
(YTD change)
Avg life
to worst
(years)
Market
cap
(US$bn)
Indonesia B1/B 8.43(-1.0) 584 (-100) 4.49 11
China B1/B+ 8.82 (-1.33) 621 (-129) 3.58 95
India Ba3/BB- 7.27 (-0.86) 486 (-82) 5.08 12
Asia HY B1/B+ 8.04(-1.0) 542 (-96) 4.51 144
100
300
500
700
900
1100
1300
1500
2015 2016 2017 2018 2019
China HY Indonesia HY India HY
Z-spread to worst (bp)
Source :J.P. Morgan as of Feb 15, 2019
Indonesia HY corporates are now trading in between China and
India HY
JACI HY Corp (ex-fin) has recouped all its losses in total return,
helped by high carry
90
93
95
98
100
103
105
Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19
Total return
since Jan 2018
4
5
6
7
8
9
10
200
400
600
800
2015 2016 2017 2018 2019
Z-spread to worst (bp) YTW(%) (RHS)
Summary view
2
Agenda
Page
1 Summary view 1
2 China HY property 3
3 China HY Industrial 26
4 Indian HY corporates 32
5 Indonesian HY corporates 35
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