Edition:
Advertisement

Developers unlikely to face rerating

Reading Time:2 minutes
Why you can trust SCMP
0

The devastating earthquake in Sichuan was unlikely to have any immediate impact on credit rating for developers with projects in the province, although profit margins and operating cash flow would be under pressure from possibly rising costs, Moody's Investors Service said.

China Overseas Land & Investment, Agile Property Holdings, China Properties Group, Coastal Greenland and Neo-China Land Group, which have projects in the affected areas, 'will probably experience some negative repercussions, including likely delays in developments and sales', said the rating agency's assistant vice-president, Kaven Tsang.

But the impact was not strong enough to warrant changes in their rating or outlook, Mr Tsang said.

It was too early to assess accurately the full impact, but materials and labour costs could rise as demand increased in response to recovery and reconstruction work, he said. That, in turn, could squeeze margins and operating cash flow.

However, cash flow generated from Chengdu and Chongqing does not constitute a material sum for most of the developers.

Only 10 to 15 per cent of the projected property cash income for China Overseas Land, Agile, Coastal Greenland and Neo-China would have been from these cities this year, Mr Tsang said.

Advertisement