Hong Kong, January 28, 2019 -- Moody's Investors Service has assigned a B3 rating to Jingrui Holdings
Limited's proposed senior unsecured USD notes.
The rating outlook is stable.
Jingrui plans to use the proceeds from the proposed notes mainly to refinance
existing debt and for general corporate purposes.
RATINGS RATIONALE
"The proposed bond issuance will support Jingrui's liquidity profile and
not materially affect its credit metrics, because the company will
use the proceeds mainly to refinance existing debt," says Cedric
Lai, a Moody's Assistant Vice President and Analyst.
Moody's expects Jingrui will moderately grow its contracted sales by 10%-15%
year-on-year to RMB28-RMB29 billion in 2019,
supported by its established market position in its core Yangtze River
Delta market. Jingrui's contracted sales reached RMB25.2
billion in 2018, up 37% year-on-year from RMB18.4
billion in 2017.
Moody's expects Jingrui's leverage, as measured by revenue/adjusted
debt, will decline to around 60%-65% over the
next 12-18 months, down from 103% in 2017 which is
primarily driven by the slower revenue recognition.
Additionally, its adjusted EBIT/interest coverage will slightly
decline to 2.1x-2.3x over the same period from 2.3x
in 2017 due to the increases of debt level and funding cost.
Jingrui's B2 corporate family rating reflects its modest scale,
moderate financial profile and relatively low but improving profitability.
The rating also takes into account the company's track record of developing
properties in Shanghai and other cities in the economically strong Yangtze
River Delta area.
The company's B3 senior unsecured debt rating is one notch lower
than the corporate family rating due to structural subordination risk.
This risk reflects the fact that the majority of claims are at the operating
subsidiaries. These claims have priority over Jingrui's senior
unsecured claims in a bankruptcy scenario. In addition, the
holding company lacks significant mitigating factors for structural subordination.
As a result, the expected recovery rate for claims at the holding
company will be lower.
The stable ratings outlook reflects Moody's expectation that Jingrui's
improved sales execution for properties in higher-tier cities in
China can be sustained, and that the company will improve its credit
metrics over the next 12-18 months.
Upward ratings pressure could develop if Jingrui substantially grows its
scale, while maintaining 1) sound credit metrics, with adjusted
revenue/debt above 95%-100%, and EBIT/interest
coverage above 3.5x on a sustained basis; and 2) maintain
adequate liquidity position on a sustained basis.
Downward ratings pressure could emerge if Jingrui's 1) liquidity weakens,
such that its cash/short-term debt falls below 100%;
and 2) profit margins come under pressure, negatively affecting
its interest coverage and financial flexibility, such that EBIT
interest coverage falls below 2.0x.
The principal methodology used in this rating was Homebuilding And Property
Development Industry published in January 2018. Please see the
Rating Methodologies page on www.moodys.com for a copy of
this methodology.
Jingrui Holdings Limited is a Shanghai-based property developer.
The company listed on the Hong Kong Stock Exchange in October 2013.
It was originally established in 1993 as Shanghai Jingrui Property Development
Company by a group of businessmen, including its current key shareholders
and executive directors, Mr. Chen Xin Ge and Mr. Yan
Hao.
The company engages in property development, with a focus on residential
projects in the Yangtze River Delta and other second-tier cities
in China.
At 30 June 2018, Jingrui's land bank totaled approximately
5.2 million square meters, located across 17 cities in China,
including Shanghai, Tianjin, Beijing and Chongqing,
and cities in Zhejiang and Jiangsu provinces.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Moody's considers a rated entity or its agent(s) to be participating
when it maintains an overall relationship with Moody's. Unless
noted in the Regulatory Disclosures as a Non-Participating Entity,
the rated entity is participating and the rated entity or its agent(s)
generally provides Moody's with information for the purposes of
its ratings process. Please refer to www.moodys.com
for the Regulatory Disclosures for each credit rating action under the
ratings tab on the issuer/entity page and for details of Moody's
Policy for Designating Non-Participating Rated Entities.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
The first name below is the lead rating analyst for this Credit Rating
and the last name below is the person primarily responsible for approving
this Credit Rating.
Cedric Lai
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Franco Leung
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
