The ongoing recovery in the Chinese auto market will support the profitability and cash flow of Yanfeng International Automotive Technology Co. Ltd. (YFAI) and its parent Huayu Automotive Systems Co. Ltd. (HASCO) in 2021-2022. We anticipate HASCO's EBITDA margin will improve toward 9.6%-9.8% in the next 12-24 months and YFAI's debt-to-EBITDA ratio will stay meaningfully below 1.5x. On Jan. 14, 2021, S&P Global Ratings revised its rating outlook on YFAI to stable from negative. We also affirmed our 'BBB-' long-term issuer credit rating on the China-based auto supplier. The stable outlook reflects our view that both YFAI and HASCO will maintain resilient operational performance and low financial leverage in the next one to two years amid continued market recovery. We
