Qingdao Conson Development (Group) Co., Ltd.

Overview Key strengths Key risks Solid and stable financial support from Qingdao municipal government. Heavy refinancing pressure due to a large debt balance accumulated for ongoing capital investments. Credit profile of Qingdao municipality will continue to benefit from a strong economic base. Potentially weakening government linkage following a growing marketization thrust by the central government. Hard to replace Qingdao Conson Development (Group) Co. Ltd.'s (QCD) social role given its importance as an operator of transportation infrastructure and civil facilities.Strong funding access from state ownership. Low profitability mainly from its social-welfare role.Business concentrated in Qingdao municipality due to policy mandate. QCD will likely continue to receive strong support from the Qingdao municipal government. As one of the most important financing platforms

...QCD will likely continue to receive strong support from the Qingdao municipal government. As one of the most important financing platforms of the Qingdao municipal government, the company has a crucial social responsibility to fund transportation infrastructure in Qingdao city and operate civil facilities. Except for tunnel operations, these businesses are loss-making. In response, the Qingdao municipal government grants operating subsidies to support them. We expect these businesses to incur Chinese renminbi (RMB) 600 million-RMB700 million of operating loss per year. To support QCD, the government has given RMB516 million of subsidies for the operations....

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