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Jan 26 • 4 tweets • 2 min read
Adani Enterprises (#ADANIENT) and Adani Group

I published an update on @smartkarma for subs (link at the end). And I have some Ugly Charts.
And an Ugly Table
Another Ugly Chart
And the Insight

smartkarma.com/insights/adani…

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More from @travislundyasia

Travis Lundy Profile picture
Jan 27, 2022
Oaktree seizes Evergrande land plot in Hong Kong.

A lot of people will be making noise about this "breaking" the restructuring plan. This is not a surprise at all, and doesn't break the restructuring plan.

Everyone who has security over an asset

ft.com/content/5d82c8…
will take everything they can so as to not lose out against those who do not have security.

This is the crucial "problem" with what is public debt - whether it be USD bonds of EVERRE, the onshore bonds of Hengda, or the WMPs.

A real estate developer has lots of projects and
the bank lenders to a project will have security on that asset.

Per project it will be
1) Homebuyers,
2) Local govts
3) banks with secured lending against the assets in the project
4) suppliers (though one expects they may move higher) by govt decision
Read 5 tweets
Travis Lundy Profile picture
Jan 26, 2022
There are a lot of headlines coming out - fast and furious - about SOEs buying development projects from troubled real estate developers.

There is a proposal that the Three Red Lines would not apply to such purchases (for the purchaser) allowing lenders to upgrade their credit
exposure from "bad developer" to "SOE developer", which theoretically would be a good thing.

There is another proposal which would create a nationwide policy/metric or allowing developers to take cash out of escrow accounts, which would improve cashflow. That only works to the
extent that net cash can be taken out and used to pay liabilities (either trade payables or upcoming debt maturities), allowing buyers to have increased confidence that if they sign on the bottom line, they won't get stuck in limbo when their apartment is not delivered.
Read 11 tweets
Travis Lundy Profile picture
Dec 29, 2021
Bank of Kyoto (8369 JP), perennial "value play" and "deeply discounted stub trade" saw shares rise 7.7% today. Bounced to a new 6mo high.

The reason? They raised the target payout ratio from 30% to 50%. Image
Bank of Kyoto famously has a very large cross-holding portfolio, with the top 90 listed names broken down in the chart below.

The portfolio has outperformed TOPIX in recent years - which is good. Image
The portfolio is large enough that the after-tax value (assuming the portfolio were liquidated and taxed) is still much larger than market cap.

The stock has traded at a mkt cap discount to after tax portfolio value for most of the last 6mos, and the widest levels in many yrs. Image
Read 5 tweets
Travis Lundy Profile picture
Oct 15, 2021
For those who track Evergrande, there is a lot one can do to read between the lines in this article about Zou Lan's (director general of the Financial Market Department of the PBOC) presser.

bloomberg.com/news/articles/…
"risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread."

The central bank has asked lenders to keep credit to the real estate sector “stable and orderly.”
“In recent years, [Evergrande] failed to manage its business well and to operate prudently amid changing market conditions... Instead it blindly expanded and diversified.”

Regulators will ensure financial support is provided so that Evergrande’s property projects may resume...
Read 16 tweets
Travis Lundy Profile picture
Oct 13, 2021
I just finished listening to the always excellent Odd Lots podcast with @tracyalloway and @TheStalwart - this time about the macroeconomic implications of the Evergrande situation with @michaelxpettis.

A great listen. Worth your time.

Professor Pettis lays it out quite cleanly, noting (in an opinion I agree with) that Evergrande did not start the fire, and that the overarching policy aims meant this was going to happen at some point. Evergrande is the poster-child because of its presence in USD debt markets
but the situation is following the model of previous cleanups starting a few years ago (Professor Pettis mentions Baoshang Bank as one model (tho I prefer HNA as the model because it will likely be a local govt-organised restructure rather than a regulator-driven restructure))
Read 24 tweets
Travis Lundy Profile picture
Oct 11, 2021
On Evergrande $3333.HK, I remain surprised we haven’t seen more commentary today about the Jumbo Fortune bond which matured 3 Oct.

It’s a privately-issued USD bond with guarantee by Evergrande, apparently. I say ‘apparently’ because the prospectus is not public.

The stories
out a couple weeks ago suggested there was no grace period (though it matured on a Sunday so wouldn’t pay til Monday) but the bondholders would extend a 5-day grace period.

That 5-day grace period ends today (assuming HK calendar).
Otherwise there are more coupons due today (with another 30-day grace period starting), then another later, but the Sep23 coupon 30d grace period ends 23 Oct.

If there is no news on Jumbo Fortune imminently one can presume either it was paid or renegotiated or the BHers
Read 11 tweets

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