Hero Asia Investment Ltd.

The stable outlook on Hero Asia reflects the outlook on its parent Longyuan (A-/Stable/--) and our view that Hero Asia will remain a highly strategic subsidiary of the group over the next 24 months. The stable outlook on Longyuan over the next 24 months reflects our view that the company's capacity-led profit growth can partly offset its significant upswing in capital expenditure, and that the deterioration of its credit ratios will be within our tolerance level for the 'bbb-' stand-alone credit profile. We expect the company's FFO-to-debt ratio to be 11%-13% over the next two years. The stable outlook on Longyuan also reflects the stable credit quality of China Energy Investment Corp. (CHN Energy), Longyuan's parent. We could downgrade Hero

...The rating on Hero Asia Investment Ltd. is largely dependent on the rating on its parent China Longyuan Power Group Corp. Ltd. We assess Hero Asia as a highly strategic subsidiary of Longyuan. We expect China's central government to provide extraordinary support to the company indirectly via Longyuan in the event of financial difficulty. The rating on Hero Asia will therefore move in tandem with that on Longyuan. Incorporated in Hong Kong, Hero Asia is Longyuan's sole offshore investment and financing platform. Hero Asia undertakes all of Longyuan's overseas financing, houses all of Longyuan's overseas renewables investments, and co-invests in the majority of onshore power projects with its wholly owned parent. Given its small scale, Hero Asia's profitability hinges on its parent's controlled investments. As of end-2020, Hero Asia's consolidated capacity amounted to 343.6 megawatts (MW), comprising two wind power projects in Canada and South Africa. The company is also developing 76MW of...

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