Research Update: China State Construction International Holdings 'BBB' Rating Affirmed; Outlook Negative

We expect the leverage of China State Construction International (CSCI) to remain elevated in 2020, with free cash flows remaining negative owing to the Hong Kong headquartered company's ongoing investments in existing public-private partnerships (PPP) and cash projects. CSCI's good reputation and satisfactory execution record in housing and infrastructure construction in Hong Kong and Macau should support its organic growth. The company generated HK$61.7 billion revenue and HK$10.1 billion EBITDA in 2019. On April 16, 2020, S&P Global Ratings affirmed its 'BBB' long-term issuer credit rating on CSCI. The negative outlook reflects our view that CSCI's business transition will take time to show effect and its leverage will remain high for the next 12 months unless the company can significantly

...- We expect the leverage of China State Construction International (CSCI) to remain elevated in 2020, with free cash flows remaining negative owing to the Hong Kong headquartered company's ongoing investments in existing public-private partnerships (PPP) and cash projects. - CSCI's good reputation and satisfactory execution record in housing and infrastructure construction in Hong Kong and Macau should support its organic growth. The company generated HK$61.7 billion revenue and HK$10.1 billion EBITDA in 2019. - On April 16, 2020, S&P Global Ratings affirmed its '###' long-term issuer credit rating on CSCI. - The negative outlook reflects our view that CSCI's business transition will take time to show effect and its leverage will remain high for the next 12 months unless the company can significantly improve its cash collection....

Research Update