We expect Xinjiang Guanghui Industry Investment (Group) Co. Ltd. (Guanghui) to control its debt leverage at 5x or below following its debt repayment in late 2018 and early 2019. The ratio was 5.9x as of Dec. 31, 2017. The company used part of the capital injection of Chinese renminbi (RMB) 7.8 billion from Evergrande Group and improved EBITDA from a turnaround in the energy business to repay debt. Guanghui spent over RMB5.5 billion of the injection on debt repayment, with close to half of that going toward clearing short-term debt. Guanghui's key auto retailing business is asset-light but requires large working capital. The company therefore has high dependence on short-term borrowings. The funds from Evergrande are not significant when compared
