Established market position in Guangzhou. Strong parental support. Aggressive growth appetite. Weakening profitability. High but improving geographic concentration. High leverage. Diversified funding sources and low funding costs. Financial flexibility provided by Yuexiu REIT. The stable outlook reflects our expectation that Yuexiu Property Co. Ltd. will achieve good property sales and control leverage over the next 18-24 months. We also expect the company to maintain good access to low-cost funding and adequate liquidity while pursuing aggressive expansion, such that the EBITDA interest coverage stays over 2.5x. We may lower the rating if: (1) Yuexiu Property's debt-funded expansion is more aggressive than we expect, such that its EBITDA interest coverage declines toward 2x; and (2) support from parent Guangzhou Yuexiu Holdings Co.
