Hong Kong, January 09, 2018 — Moody’s Investors Service has assigned a B2 rating to the USD senior unsecured notes proposed by way of Times Property Holdings Limited (B1 wonderful). Times Property plans to apply the proposed notice proceeds specifically to refinance current indebtedness.
“The proposed notice issuance will now not have a material impact on Times Property’s credit score metrics because the proceeds may be in particular used for refinancing,” says Danny Chan, a Moody’s Analyst and also the Lead Analyst for Times Property. In addition, the proposed issuance will lengthen the organization’s debt adulthood profile and reduce its average financing cost because it will use the proceeds to refinance its present better value borrowings.
The tremendous outlook on Times Property’s CFR displays Moody’s expectation that the organization will enhance its debt leverage, supported by a sturdy sales boom and a solid gross income margin over the next 12-18 months. Moody expects the company’s debt leverage — as measured by revenue/adjusted debt — will gradually improve thru robust sales increase to around seventy-five%-eighty% inside the subsequent 12-18 months. This is based totally upon the corporation’s strong 42% contracted sales growth 12 months-on-year in 2017 to RMB41.6 billion, to be able to in flip help sales increase over the next 1-2 years.
The agency also maintained its pronounced gross income margin at 26.Four% in 1H 2017, largely unchanged from 2016, and a stage that has to support homebuilding EBIT/interest above 3x inside the next 1-2 years. Times Property’s liquidity position is strong. Its coins balance of RMB13.1 billion at the end of June 2017 properly blanketed its debt of RMB2.4 billion maturing over the following three hundred and sixty-five days. Times Property’s B1 company own family rating (CFR) displays its growing working scale, mounted brand, and track file in Guangdong Province.
The employer’s score additionally takes into consideration its stable earnings margins and sturdy liquidity profile. However, Times Property’s B1 CFR is tempered with the aid of its (1) geographic awareness in Guangdong Province; and (2) exposure to the financing and execution dangers associated with its speedy growth commercial enterprise method. The senior unsecured score on the proposed notes is one notch lower than the organization’s CFR because of structural and felony subordination risk.
This threat displays Moody’s expectation that the general public of claims might be at the level of the working subsidiaries. It could have precedence over claims at the maintaining organization in a bankruptcy situation. In addition, the keeping enterprise lacks tremendous mitigating elements for structural subordination, lowering the expected recovery rate for claims on the keeping organization.
Upward score stress ought to emerge if (1) Times Property indicates a record of strong growth in income and running scale and maintains its strong cash role with cash/short-term debt of 2x; and (2) the organization’s sales/adjusted debt exceeds seventy five%-eighty% and altered EBIT/hobby exceeds 3x on a sustained basis. On the opposite hand, the rating outlook should return to solid if Times Property suggests (1) volatility in its gotten smaller sales and sales; (2) better-than-anticipated land acquisitions; or (3) a discounted probability of its credit metrics achieving degrees suitable for a scoring upgrade over the medium term.
The main technique utilized in these rankings was Homebuilding, And Property Development Industry, posted in April 2015. Please see the Rating Methodologies page on www.Moodys.Com for a replica of this technique. Times Property Holdings Limited is a belongings developer based in Guangdong Province, centered on assembly end-person demand for mass-market housing. At the give-up of June 2017, it had sixty-two assets projects across 8 towns in Guangdong Province and Changsha metropolis in Hunan Province. It is a land financial institution totaled around 14.5 million rectangular meters as of the equal date.
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