Fitch Ratings revised its outlook on China Evergrande Group and subsidiary Hengda Real Estate Group Co. Ltd to stable from positive.
The outlook revision reflects Fitch's expectations that flat contracted sales, higher spending on non-property business and increased reliance on short-term debt will undermine the group's ability to reduce debt.
Fitch said China Evergrande's contracted sales will likely equal the 551 billion yuan reached in 2018, and will fall below the company's 600 billion yuan target. It also expects operating cash flow to weaken due to the company's increased capital spending on its non-property business, which will have minimum contribution to recurring income.
The rating agency affirmed the companies' long-term foreign-currency issuer default ratings at B+.
As of Sept. 20, US$1 was equivalent to 7.09 Chinese yuan.
