Yangzhou Economic and Technological Development Zone Development (Group) Co., Ltd.

Overview Key strengths Key risks Dominant local government financing vehicle (LGFV) in the economic zone of Yangzhou city in China. Rising financial leverage due to large scale "on-lending" to other local state-owned enterprises and capital expenditures. Strong record of ongoing support from the government, with more than Chinese renminbi (RMB) 3.6 billion in capital injections and financial subsidy during 2020. Weak operating cash flow due to weak profitability from government-mandated infrastructure projects and heavy interest burden from the company's on-lending makes it reliant on government capital injections and subsidies. Extremely high likelihood of receiving extraordinary support from Yangzhou government. given Yangzhou Economic and Technological Development Zone Development (Group) Co. Ltd.'s role as the sole platform for primary land development and

... Zone Development (Group) Co. Ltd. (YETDZ Dev. Group) has an extremely high likelihood of receiving extraordinary support from the municipal government, in our view. The company is the dominant platform for infrastructure financing and development in Yangzhou's economic and technological development zone (ETDZ), and it is the sole primary land developer in the area. ETDZ is the only national-level development zone in Yangzhou city. The development zone is one of the government's key platforms to drive investment and modernize the manufacturing industry with a focus on certain industries, including new energy and new material. The company's pipeline of infrastructure investments remains strong, with a near-term focus on resettlement housing and environmental improvement along the Yangtze River. We forecast annual capital expenditure (capex) by YETDZ Dev. Group of about RMB1.5 billion during 2022-2023, largely in line with its reported level...

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