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S&P places Hikvision's ratings on CreditWatch Negative after US blacklist

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S&P places Hikvision's ratings on CreditWatch Negative after US blacklist

S&P Global Ratings placed Hangzhou Hikvision Digital Technology Co. Ltd.'s A- long-term issuer credit rating on CreditWatch with negative implications following the United States' decision to add it, among other companies, to its trade blacklist.

Washington listed Hikvision and 27 other Chinese companies and agencies to its Entity List on Oct. 7, which would restrict the company's ability do to business with American companies unless a license is granted by the U.S. government.

The rating agency expects the move to dent the market position of the world's largest manufacturer of video surveillance equipment. The company may lose to Chinese competitors that do not have any such restrictions.

In addition, the blacklisting would hamper the company's supply chain and affect its business operations. Manufacturing, especially of high-end video surveillance equipment, could be disrupted as many of its inputs are supplied to Hikvision by U.S. companies.

Overseas revenue, which makes up about 30% of the company's proceeds as of the first half of 2019, may take a hit due to shrinking sales channels and dull demand in Europe and the U.S., S&P Global Ratings said.

Ratings said it will lower the company's ratings by at least one notch if its supply chain and production are disrupted, if its market share and profitability deteriorate, or if its credit metrics significantly weaken. It will affirm ratings if the company manages to allay persisting export-related risks.

Hikvision reportedly said the blacklisting may have a short-term impact on its performance.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.