The Zhitong Finance App learned that on April 12, S&P released the latest rating report for Longhu Group (00960), confirming that its long-term issuer credit rating is “BB+” and that the long-term issuance rating of advanced unsecured notes is “BB”. S&P pointed out in the rating report that based on the Longhu Group's steady cash flow management, strong rental income, and good debt management, it is believed that Longhu has sufficient liquidity and the risk of short-term debt repayment and refinancing is very small. S&P also predicts that due to increased profit contributions from high-margin investment properties and property services, Longhu's adjusted EBITDA margin will increase from 17% in 2023 to 18%-20% in 2024-2025.
S&P said the company can use shopping centers to obtain operating property loans to maintain its solvency. As of the end of 2023, Longhu's operating property loan balance was 47.4 billion yuan. In the first quarter of 2024, the company added more than 18 billion yuan in operating property loans. Among them, an additional 12 billion dollars was added by increasing the collateral ratio of existing loans.
However, S&P is still concerned about the future of the real estate industry, believing that against the backdrop of the downturn in China's real estate industry, contract sales of housing enterprises will continue to weaken, profit margins will be under pressure, and the overall recovery of the market will take time.
Recently, S&P, Moody's, and Fitch have all downgraded housing companies' ratings, and credit ratings of Vanke, Xincheng, Jinhui, and Agile have all been downgraded.
Based on pessimistic expectations about real estate, Fitch also adjusted China's sovereign credit rating outlook from “stable” to “negative.” In response, a finance department spokesperson pointed out that the index system of Fitch's sovereign credit rating methodology fails to effectively and proactively reflect the positive effects of “moderately strengthening, improving quality and efficiency” of fiscal policy in promoting economic growth and thereby stabilizing the macro leverage ratio.
Recently, international rating agencies are seriously bearish on Chinese companies, and some housing enterprises have withdrawn from international ratings. On the 11th, Poly Development issued an announcement stating, “Since the company has no plans to continue issuing bonds overseas in the near future, the company will keep one of the three international credit rating agencies it has hired to continue to provide the company with a credit rating to reflect the company's credit status.” As of now, its Moody's rating has been withdrawn.