EM ASIA CREDIT: China Modern Dairy: Profit warning
(CNMDHL, -/BBB/-)
"*CHINA MODERN DAIRY ISSUES PROFIT WARNING" - BBG
Chinese dairy company, China Modern Diary, has issued a profit warning. Negative for spreads.
The company expects H1 results (end June) to record a net loss between RMB800m to RMB1,000m, compared to a net loss of RMB207m in the year ago period. The loss is primarily driven by non-cash charges from the revaluation of its dairy cows (fewer cows, lower milk prices).
The company has taken steps to reduced costs, and expects cash EBITDA to be the same as in H1 2024 (c. RMB1,515m). We note that the existing $ 7/26 bond has been partially repurchased, with the possibility of future purchases.
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JGB TECHS: (M5) Rallies off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.40 @ 15:42 GMT May 23
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows and for now, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
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Treasury reported a record $16.5B in customs/excise taxes on May 22, reflecting the large increase in tariff rates that went into effect in April.
- Today's report is important because it represents the largest tariff collections of the month which are typically on a due date around the 22nd, when most corporate importers make their payments.
- Thursday's one-day collection is a record, and the month has already set a new record. Tariff revenues have totaled $22.3B so far in May, and are came in at $17.4B in April (after averaging $8.1B/month in 2024).
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US FISCAL: Extraordinary Measures Continue To Dissipate Alongside Treasury Cash
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- Treasury Sec Bessent warned Congress earlier this month that "there is a reasonable probability that the federal government's cash and extraordinary measures will be exhausted in August while Congress is scheduled to be in recess. Therefore, I respectfully urge Congress to increase or suspend the debt limit by mid-July".
