Fitch puts SHKP outlook in new light

PUBLISHED : Saturday, 02 August, 2003, 12:00am
UPDATED : Saturday, 02 August, 2003, 12:00am

Two weeks after Sun Hung Kai Properties (SHKP) complained about a weak credit assessment by Fitch Ratings, the ratings agency said yesterday the developer had defied the volatility and prolonged decline in the Hong Kong property market.

In a newly released research report, Fitch said SHKP had retained 'robust credit metrics despite the tough economic environment and operating environment'.

'SHKP's conservative financial profile, cautious dividend policy and excellent business model have made it a benchmark property development and investment company,' it said.

The comments came a fortnight after Fitch assigned SHKP an A-minus rating, citing the severe deterioration in the property rental market and a decline in the company's property development margins in recent years.

The rating is lower than that assigned by Moody's, which rates the firm's foreign-currency debt on the same A3 level as the Hong Kong government.

The Fitch rating drew an immediate complaint from SHKP which queried the agency's findings. The developer said it had not provided Fitch with any detailed and relevant information that could lead to a proper rating.

In the research report, Fitch did not mention the decline in SHKP's property development margins in the text, although the softening margins from property sales were shown in a table.

Fitch analyst Adam Preece yesterday denied the agency had changed its stance on the developer. 'Our view on the market and Sun Hung Kai has not changed,' he said, adding the A-minus rating was maintained.

However, Mr Preece admitted the research report had drawn queries from some fund managers about whether the agency had faced pressure from the developer.

He dismissed the speculation, saying the report was already scheduled for publication when the agency issued its press release on the credit rating two weeks ago.

Mr Preece said SHKP had not contacted him since the press release was issued, adding he was surprised by its complaint.

'When I got the press release from SHKP [complaining about the rating], I was really quite shocked,'' he said.