Modern Land Upgraded to 'B+' by Fitch Ratings, Outlook Stable

Monday, 22 August 2016, 16:16 HKT/SGT

HONG KONG, Aug 22, 2016 - (ACN Newswire) - A leading real estate developer of green technological properties - Modern Land (China) Co Ltd ("Modern Land," the "Company," together with its subsidiaries, the "Group," HKSE stock code: 1107.HK) -- is pleased to announce that Fitch Ratings, an international credit ratings institution, has upgraded Modern Land's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to "B+" from "B". The Outlook is "Stable." Fitch has also upgraded Modern Land's senior unsecured rating and the ratings on all outstanding bonds to "B+" from "B", with the Recovery Rating at "RR4".

Fast Expansion, Larger Scale: Modern Land's reported contracted sales increased by more than 70% yoy to CNY7.5bn in 1H16. Fitch expects the company to achieve its CNY15bn reported contracted sales target for the full year based on Modern Land's project pipeline in 2H16. Fitch expects Modern Land's attributable contracted sales to increase in the double digits each year in the next two years to stay above CNY10b, supported by more than CNY40bn of attributable saleable resources, by Fitch's estimate.

Improving but Small Land Bank: Modern Land's land bank has strengthened after it extended coverage to more Tier 1 and 2 cities since 2014. This is supported by its land replenishment strategy of maintaining quality land reserves in Tier 1 and 2 cities equivalent to two to three years of sales.; Tier 1 cities like Beijing and Shanghai, and Tier 2 cities like Hefei, Changsha, and Suzhou account for more than 60% of Modern Land's existing saleable resources.

Low Leverage, Disciplined Financial Policy: Modern Land's leverage continued to be controlled and comparable with "B+"-rated peers in 1H16. Leverage rose to 26% in 1H16 from 22% in 2014, driven by increased pressure to replenish quality land bank and the shift towards higher-tier cities. Fitch expects Modern Land's leverage to remain below 40% until the company materially increases its land reserves relative to its sales.

Sufficient Liquidity, Lower Funding Cost: Modern Land's liquidity remains healthy. It managed to significantly lower its funding cost to 8.4% in 1H16 from 10.5% in 2015, after the completion of a CNY1bn five-year onshore bond issuance in 1H16 at a 6.4% coupon rate. Fitch expects the lower borrowing cost will strengthen Modern Land's credit profile.

Mr. Zhang Peng, the Executive Director and President of Modern Land, said: "We appreciate the continuous attention and acknowledgement from Fitch Ratings and international capital markets, and we are happy to be upgraded to 'B+'. It is obvious that the Group places a high priority on increasing sales amounts, enhancing the operation efficiency, expanding project scale and stabilizing financial performance. We have been engaging in developing "green + comfort + energy saving + mobile interconnecting full-life-cycle communities", and continuously upgrading products, exploring expansion, and stabilizing operations while concentrating on the views and evaluations from ratings agencies along with all the investors and maintaining close communication with them. The positive views recognized by capital markets are the reward for our operating results. The Group will sustain this favorable performance as well as attain further growth. Furthermore, we will enrich our product lines, fight for better sales turnover, and maintain a healthier financial position, and we will continuously bring sustainable investment returns to all the investors."

Topic: Press release summary Sectors: Daily Finance, Daily News
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