Category: Reports

Predict, Not Extrapolate.

China’s Top Property Developers Have a Payable Problem

Payables = Trade and Other Payables + Amounts due to Related Parties Payables have outgrown debt. Payable paydown is slowing

Integrated Equity and Credit Valuation

This report presents an integrated framework of credit and equity valuation using Modtris core action-based corporate model and intelligent Monte-Carlo simulation. Debt and equity are both part of a company’s balance sheet structure, and their valuation should be the outcome of one single algorithm that projects the future corporate balance sheet. There has been past…
Read more

Default and Recovery Curve, and Implied Credit Yield Curve

Concord New Energy (182.HK) is a builder and operator of wind and solar power plants in China. Prior to 2016, the company was primarily engaged in equipment manufacturing and construction. Since then, the company has focused on acquiring new power plants and operating as power generator. The company has grown its power plant asset and…
Read more


Case of Renewable Power Generator (Concord New Energy) Following the previous report, this report provides examples of Revolving Asset Operators with long asset turnover period. This category can consist of hotel operators, airlines, and power generators. The following generic model is used to model after solar or wind farm operators.

Generic Model of Revolving Asset Operators – (Example in Car Rental with CAR Inc.)

Revolving Asset Operators invest in and operate revenue generating assets. The operators generate revenue by charging customers for utilizing the capacity provided by the assets for a given period of time. Revolving asset operators make up a wide range of industries such as hotel, airline, rental car, solar power generation, etc. Each industry differs in…
Read more

DR HORTON Model, Scenario of Shock and Recovery

We establish a basic model for DHI based on 6-years of financial reports. The company shows a 6% perpetual cash growth rate under extended constant condition scenario. Key factor includes inventory sales ratio on 1-year old inventory, for which the critical transition level is 87% vs. 100% current. The scenario of a 4-year shock on…
Read more

Payable is the New Debt for China’s Top Developers

For China’s property developers, there are three main sources of funding to support land acquisition and property construction – debt, pre-sale, and increase in payable. Debt, either bank loans or bonds, must be repaid with cash at a pre-defined maturity date. Pre-sale, the proceeds from preselling uncompleted properties, is repaid in kind by delivering completed…
Read more

Which One of China’s Properties Big 3 Sells Its Projects the Quickest?

A Chinese property developer typically takes two years to complete a project from start to finish. However, developers in China can pre-sell the projects before they are completed. The sooner a developer receives cash from pre-selling a project, the sooner the developer recycles capital and the stronger is its liquidity. However, the financial statements do…
Read more

Car Inc’s short-term and long-term sustainability model

In the previous article, Modtris model reverse-computes the historical operating metrics of Car Inc using only balance sheet and income statements from 2013 to 2019. With these operating metrics, the short-term and long-term sustainability of the company are simulated. Short-term: cash position under extreme scenarios are simulated. Long-term: financial outcome under constant level of financing…
Read more


Following the announcement of internal investigation of Luckin Coffee, Car Inc was immediately under fire for the guilt of association. Its stock price on HK stock exchange lost more than 50% value and subsequently Moody’s and S&P downgraded the company’s rating to Caa1 and CCC. The primary market concern may be that Car Inc, even…
Read more