Fitch Ratings affirmed its ratings on Chinese property giant China Vanke Co. Ltd. at BBB+, with a stable outlook.
The ratings affected include China Vanke's long-term foreign- and local-currency issuer default ratings, its senior unsecured rating and the ratings on the company's outstanding notes.
The rating agency said the affirmation takes into account China Vanke's robust financial profile, as it boosts investments in non-homebuilding businesses and increases homebuilding sales.
The company's low leverage provides it with strong financial flexibility to counter industry headwinds that are driven by regulatory constraints.
According to the rating agency, China Vanke had adequately built up its land bank to capitalize on the house-price hikes between 2016 and 2018, adding that the improved profitability will help restructure its businesses beyond homebuilding.
Citing a higher risk of a property-market downturn by 2020, Fitch expects China Vanke to slow its land purchases, to prepare for cash flow pressure as sales fall and to seek earnings outside Chinese homebuilding.
The agency also projects that China Vanke will achieve a cumulative total sales gross floor area of 126.5 million square meters over the next three years, and that the company's high profitability environment until 2020 on a sales basis will keep operating cash flow positive.
Fitch also expects China Vanke to remain the market leader in China's residential homebuilding sector.