S&P Global Ratings revised the outlook on Jiangsu Zhongnan Construction Group Co. Ltd. to positive from stable and affirmed the Chinese company's long-term issuer credit rating at B and long-term issue rating on its senior unsecured notes at B-.
The rating agency said Sept. 20 that the outlook revision reflects its expectation that Jiangsu Zhongnan's operating scale will continue to grow and its leverage will improve over the next 12 to 24 months due to stronger revenue recognition and proportionally slowing debt-financed expansion.
Moody's expects the company's total contracted sales to reach about 180 billion yuan in 2019 and grow by 10% to 15% per year in 2020 and 2021. Meanwhile, the group's EBITDA margin may moderately decline to 18% to 20% in 2019 and 2020 due to its substantial exposure to lower-tier cities and the lower-margin engineering and construction business, the agency said.
Ratings expects Jiangsu Zhongnan's profitability to decline moderately as it transitions toward higher-tier cities, and expects the company's debt-to-EBITDA ratio to remain below 6.0x following the end of 2020.
As of Sept. 20, US$1 was equivalent to 7.09 yuan.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found in the sources section.
