Fitch: Guangdong Sees Traffic Growth, Despite China-Wide Decline

(The following matter was expelled by a rating agency)
HONG KONG, Aug 31 (Fitch) China’s Guangdong range recorded
4% passenger
turnover expansion in a initial 7 months of 2016, compared with
a nation-wide
decline of -6%, says Fitch Ratings. The range also saw a 7%
increase in
freight turnover opposite a inhabitant normal of 4%. The
above-average growth
reflects Guangdong’s significance as China’s vital trade and
manufacturing hub.
We design trade expansion of Fitch-rated southern-China
expressway operators to
remain solid, with passenger-traffic behaving as a pivotal driver
due to increasing
passenger-vehicle tenure and low oil prices. According to the
China
Association of Automobile Manufacturers, passenger-vehicle sales
volume
increased 11% yoy in a initial 7 months of 2016, that Fitch
believes was
due to a taxation advantages offering by a executive supervision on
passenger-vehicles
since Oct 2015.
We design EBITDA margins of Fitch-rated expressway operators to
remain fast at
around 75%, with China’s tariff process remaining unvaried in
the near-term and
small increases in handling expenses.
Shenzhen Expressway Company Limited (SZE, BBB/Stable) benefits
from its
strategic position in Guangdong, with 8 out of nine
consolidated expressways
located in a province. The association accessible 17% yoy traffic
growth in the
first 7 months of 2016, as did Yuexiu Transport
Infrastructure Limited’s
(YXT, BBB-/Stable) GNSR Expressway, that is also located in
Guangdong. Other
listed expressway operators with a vast bearing to the
province, including
Hopewell Highway Infrastructure Limited and Guangdong Provincial
Expressway
Development Co., Ltd, saw trade expansion of over 10%.
Factoring in SZE’s Shenzhen Outer Ring Road Project and Meilin
Checkpoint Urban
Renewable Project, we design a company’s FFO-adjusted net
leverage to remain
below 2.0x and a FFO fixed-charge coverage to stay during 4.0x in
2016-2019. While
no sum are provided, SZE is looking for investment
opportunities in the
environmental insurance zone and could potentially rise it
as its
second-core business. Any new investments – depending on size,
profitability and
financing arrangements – could impact a company’s pivotal credit
metrics.
YXT is on lane to improving a debt-structure by reducing
secured debts, with
the company’s cumulative debts descending from CNY5.4bn during end-2015 to
CNY4.7bn at
end-1H16 (adjusted for cumulative loans hold by a disposable asset
– Yue Xin
Chishui Terminal Company Limited). Fitch expects YXT’s
FFO-adjusted net leverage
to urge overtime from 5.9x in 2015, returning to below
Fitch’s negative
rating guideline of 5.5x in 2017 or 2018, exclusive any major
acquisitions.
Contact:
Cecilia Chan
Associate Director
+852 2263 9905
Fitch (Hong Kong) Limited
19/F Man Yee Building
68 Des Voeux Road Central
Hong Kong
Edwin Lam
Director
+852 2263 9975
Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935,
Email:
wailun.wan@fitchratings.com.
Additional information is accessible on www.fitchratings.com
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