Yanfeng International Automotive Technology Co. Ltd.

The stable outlook on YFI reflects our view that YFI and its parent, Huayu Automotive Systems Co. Ltd. (HASCO), will maintain their solid market standing and low leverage in the next 12-24 months, benefiting from continued recovery in key markets. We anticipate HASCO's adjusted EBITDA margin will stay at 9%-10% and YFI's debt-to-EBITDA ratio will remain below 1.0x during the period. We could lower the rating on YFI if the company's stand-alone credit profile (SACP) and its parent HASCO's group credit profile deteriorate at the same time. We could lower HASCO's group credit profile if the company's competitive position weakens significantly in the next 12-24 months. This could be indicated by a decline in EBITDA margin to below 6%, owing

... Ltd. (YFI) will remain a leading player in the global auto interior parts market. We estimate YFI will maintain a market share of 10%-13% in key markets for its major product segments, such as instrument panels and door panels, in the next 12-24 months. Our view reflects the company's competitive products, diversified customer base, and long-standing relationship with key original equipment manufacturers (OEMs). This is evident from its strong new orders intake, which rose by over 20% in the first 11 months of 2020. YFI's profitability could return to pre-pandemic levels by 2022 thanks to continued market recovery. We expect sales of global light vehicles to increase 7%-9% in 2021 and 6%-8% in 2022, with demand picking up momentum after the pandemic-struck 2020. Rising demand, cost-saving measures, an improving product mix, and expansion in the new energy vehicle (NEV) market should help restore the company's profitability. However, intense...

Full Report