Summary: Yuexiu Property Co. Ltd.

Established leading market position in Guangzhou. Strong parental support. Aggressive growth appetite. Low profitability which we expect to only recover moderately. Some geographic concentration. High leverage due to aggressive land acquisitions amid declining margins. Diversified funding sources and low funding costs. Financial flexibility provided by Yuexiu REIT. The negative rating outlook on Yuexiu Property Co. Ltd. reflects our view that the company's elevated leverage could remain weak over the next six to 12 months, and that there is limited visibility over its ability to deleverage. Yuexiu Property's elevated leverage, if not improved, will also likely sustain the high leverage of its parent, Guangzhou Yuexiu Holdings Co. Ltd. Nevertheless, we expect Yuexiu Property to achieve satisfactory sales and take a more

...Outlook: Negative The negative rating outlook on Yuexiu Property Co. Ltd. reflects our view that the company's elevated leverage could remain weak over the next six to 12 months, and that there is limited visibility over its ability to deleverage. Yuexiu Property's elevated leverage, if not improved, will also likely sustain the high leverage of its parent, Guangzhou Yuexiu Holdings Co. Ltd. Nevertheless, we expect Yuexiu Property to achieve satisfactory sales and take a more disciplined approach to land acquisitions, such that EBITDA interest coverage remains at around 2.5x....

Summary