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Moody's affirms Central China Real Estate's corporate family rating

Moody's affirmed the Ba3 corporate family rating of Central China Real Estate Ltd., with a stable outlook.

The rating decision is based on the company's leading market position in China's Henan province and its history of stable growth in contracted sales over the past five years, according to Kaven Tsang, a Moody's vice president and senior credit officer.

Tsang, who is also the lead analyst for Central China Real Estate, added that the agency also considered the company's geographic concentration in Henan, the execution risks that it faces and its growing needs for funding in affirming the rating.

For the following 12 to 18-month period, Moody's anticipates the Chinese developer's contracted sales to rise to about 35 billion yuan to 40 billion yuan. The growth is in turn expected to trigger an increase in its revenues and earnings before interest and tax and partly counter the impact of its rising debt.

Central China Real Estate's adjusted revenue/debt is estimated to come down to between 80% and 90% from 97% in 2017.

As of May 30, US$1 was equivalent to 6.42 yuan.