EM ASIA CREDIT: FY Results: Hindalco Industries (Ba3/BB/NR) - Beat
FY results strong, positive for spreads
• Hindalco Industries reported its FY results after close yesterday with reported EBITDA +38% YoY to INR355bn and ahead of consensus. Positive for spreads.
• The bulk of the improvement comes from the Aluminium Upstream segment, where EBITDA/ton soared (+76% YoY) on lower input costs. These units represented 34% segment EBITDA. Outside of India, Novelis EBITDA (43% of segment) was marginally lower (-2% YoY).
• In terms of credit metrics, consolidated reported net debt to EBITDA was 1.1x at end FY25 versus 1.3x the year ago period. Novelis leverage was more or less unchanged at 2.9x end FY25 versus end FY24. In terms of a partial IPO of Novelis, this looks to have been put on hold until next year.
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INDONESIA: Trade Surplus Widens In March, Highly Exposed To China
Indonesia’s March trade surplus widened to $4.33bn, highest since November, from $3.117bn when a narrowing had been forecast. Exports were stronger than expected rising 3.2% y/y when a 2.4% fall had been expected. Imports grew 5.3% y/y up from 2.3% in February but moderately slower than forecast. The data are too early to show any impact from the US’ increased trade protectionism with the universal 10% tariff not implemented until this month.
Indonesia merchandise trade balance US$mn vs 3-month ma
- USDIDR is around 16804 today after a high of 16840 on Thursday. The fall in the pair is due to broad-based US dollar weakness (BBDXY USD index -0.7%) following comments from US President Trump that the Fed should cut rates and threats that he may replace Chairman Powell.
- The US administration announced a 32% duty on imports from Indonesia as part of the reciprocal tariff package. At this point, it has been delayed and Indonesia hasn’t retaliated. It expects a deal with the US within 60 days. Indonesia is highly exposed to China though with 24% of 2024 exports going there, while 10.6% were shipped to the US. Thus it is highly vulnerable to an unresolved US-China trade war.
- March non-oil & gas annual export growth was driven by agriculture +32.8% y/y and manufacturing +9% y/y, with shipments to all major destinations posting positive annual growth, except to India.
- Q1 nominal exports rose 6.9% y/y and imports around 1.5% y/y.
Indonesia goods exports vs imports y/y% 3-month ma
Source: MNI - Market News/LSEG
CHINA: Country Wrap: Loan Prime Rates on Hold
- Chinese plastics factories that depend on ethane gas that is predominantly imported from the US are may be forced to limit production as the world’s two largest economies go head to head in a trade war. (source BBG)
- The benchmark lending rates in China remained unchanged this month at 3.1% for the 1-year and 3.6% for the 5-year as officials patiently wait to see how the trade war plays out across the economy before they alter policy. (source DJ)
- The Hang Seng rose +1.6% today for one of the biggest gains in the region, with the CSI 300 not as euphoric rising just +0.15%, Shanghai Comp +.30% and Shenzhen Comp +0.99%.
- Yuan Reference Rate at 7.2055 Per USD; Estimate 7.2926
- China’s 10YR rose +1bp today to be at 1.66%
GOLD: Gold Surges as USD Struggles
- Playing catch up after a closed period Friday, gold jumped in early trading in the Asia morning to reach new all-time highs.
- Opening at US$3334.44, gold has touched a new high of $3,376.03.
- This takes gold year to date gains in excess of 28% and is causing forecasters globally to reset their year end expectations.
- Gold sits above all major moving averages, with the nearest the 20-day EMA of $3,158.88
- A strong day for China bourses yet mixed throughout the region despite the weaker USD.
