Lai Fung’s leverage is also lower than ‘BB’ rating category

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Fitch moncler coats cheap Affirms Lai Fung ‘BB

(The following statement was released by the rating agency) HONG KONG, June 01 (Fitch) Fitch Ratings has affirmed Lai Fung Holdings Limited’s Long Term Foreign and Local Currency Issuer Default Ratings (IDR) at ‘BB ‘ with Stable Outlook. Fitch has also affirmed the Chinese property company’s senior unsecured ratings and the rating on its CNY1.8 moncler outlets uk billion senior notes denominated in offshore yuan and due 2018 at ‘BB ‘. The affirmation moncler jackets kids is supported by Lai Fung’s stable financial profile with investment property (IP) EBITDA/gross interest ratio at 1.3x and total debt to total property asset at 28.9% at 31 July 2016, both similar to levels a year earlier. Furthermore, Fitch expects Lai Fung’s IP EBITDA interest cover to remain above 1x due to the first full year of contribution to rental income from its new Guangzhou Lai Fung Tower in the financial year ending 31 July 2017 buy moncler jackets toronto (FY17). The moncler outlet ny new property drove an 11.5% increase in rental revenue in moncler chicago 1HFY17 even though the Chinese yuan weakened by 5.7% yoy. Lai Fung’s ratings continue to be constrained by its small IP EBITDA of around USD60 million, material exposure to development properties, and the large amount of investment property under development with a gross floor area of 3.6 million square feet (sq ft) compared with the current 3.2 million sq ft of completed investment property in operation. KEY RATING DRIVERS Prudent Financial Management: Lai Fung has maintained neutral to positive operating cash flow by focusing on moncler outlet online generating healthy profit margin in its development property business Official Moncler Outlet to support the development of new investment properties between 2011 and 2016. Lai Fung’s leverage, as measured by total debt/total property assets, remained less than 30% after it peaked in FY13, as it raised funds in the equity market and maintained stable cash flows from property moncler coats for women sales. Between FY15 and cheap moncler 1HFY17, the gross floor area (GFA) of development property projects available for sale fell to 3.5 million sq ft (excluding joint venture project) from 5.9 million sq ft, which helped to generate HKD576 million of FCF in FY16. Hengqin Project Long Term Positive: The Hengqin Novotown project will become an important source of recurring income after completion in 1HFY19 and will likely push total IP EBITDA above HKD600 million when the project matures after FY20. The sale of cultural themed properties may generate sales of about HKD1 billion to support the development of this project from FY18. We expect the development of this project to increase Lai Fung’s leverage to above 30% in the short to medium term, but leverage will still be below the threshold where Fitch could consider negative rating action. Lai Fung will need to spend another HKD2 billion in Phase 1 of the project, which is on track. Construction started in 2HFY15 and the company has signed license agreements that cover about 60% of the project’s culture and hospitality themed GFA of around 1.5 million sq ft. Reducing Concentration of Rental Income: Fitch expects Shanghai Hong Kong Plaza, Lai Fung’s flagship investment property, to account for less than 50% of the company’s rental revenue by FY19, from about 60% currently. The decline will result from the addition of new investment properties. We expect Lai Fung’s mature investment properties have rental growth in the moncler jackets cheap mid to low single digits and achieve stable EBITDA margin of around 62%. Its already high occupancy of above 95% for most of its key office and retail properties mean that further rental revenue upside will mainly be driven by positive rental reversion. Lower Contribution from Residential Projects: Lai Fung’s sales of development properties will be mainly driven by the Palm Spring project in Zhongshan city moncler jackets for women in Guangdong province. Lai Fung’s gross profit margin for development property has been above 40% since FY09, except for FY11 moncler outlet kids and we expect this margin to be sustained in the next two to three years, underpinned by the stable or rising selling price of the Palm Spring project. cheap moncler coats for women Lai Fung’s 3.5 million sq ft of saleable GFA of development properties will last until FY21 or FY22 based on the current construction schedule. We have assumed in our analysis that Lai Fung will acquire development property projects every two to three years. DERIVATION SUMMARY Lai Fung’s shopping malls and offices enjoyed healthy occupancy of over 90% and high single digit rental rate growth. Its IP EBITDA/gross interest cover has been above 1.2x; setting it apart from most Chinese homebuilders that rely discount moncler outlet on more risky development property sales to service their debts. Lai Fung has a significantly stronger financial profile than Golden Wheel moncler outlet online store Tiandi Holdings Limited (GWTH, B/Stable), which is also focused on investment properties. GWTH’s IP EBITDA/gross interest coverage was only 0.5x at end 2016 and its leverage, as measured by net debt/adjusted inventory, of 29% was higher than Lai Fung’s 16%. Lai Fung’s leverage is also lower than ‘BB’ rating category peers’ leverage of between 30% and 40%. Lai Fung’s small moncler coats for cheap IP EBITDA of around USD60 million in FY16 and material exposure to development properties risks constrain its ratings. KEY ASSUMPTIONS Fitch’s key moncler jackets mens assumptions within our rating case for the issuer include: Replenishes development property land bank over a three year sales cycle Mid to low single digit rental rate growth IP GFA growth according to management guidance as per interim report Capex and dividend for FY17 and FY18 similar to FY16 level Hong Kong dollar at 1.15 to Chinese yuan over FY17 FY19 RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action Annual EBITDA from investment properties rising above HKD600 million (FY16: HKD381 million, 1HFY17: HKD216 million) and EBITDA from investment properties/interest expenses moncler outlets sale exceeding 1.5x on a sustained basis (FY16: 1.3x, 1HFY17: 1.4x) Future Developments That May, Individually or Collectively, Lead to Negative Rating Action EBITDA from investment properties/interest expenses falling below 1.0x on a sustained basis, moncler jackets on sale or Total debt/property moncler jackets toronto assets exceeding 40% on a sustained basis (FY16: 28.9%, 1HFY17: 28.7%) LIQUIDITY Lai Fung has maintained enough cash to cover its short term debt expiring in the past. It had HKD1.9 billion of cash on hand and undrawn credit facilities of HKD3.6 billion at 31 January 2017, which was sufficient to meet its short term bank loans of HKD18 million and offshore yuan denominated senior notes of CNY1.8 billion due April 2018. Lai Fung’s growing recurring EBITDA of over HKD400 million will also provide steady cash flow to support its debt servicing. Contact: Primary Analyst Su Aik Lim Senior Director +852 2263 9559 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des moncler jacket outlet Voeux Road Central Hong Kong Secondary Analyst Chloe He Associate Director +852 2263 9969 Committee Chairperson Kalai Pillay Senior Director +65 6796 7221 Summary of Financial moncler outlet woodbury Statement Adjustments Only interest bearing loans, which are from joint ventures, are included in gross debt. This is to have better comparison with peers that use non interest bearing funding from project partners. 10 Mar 2017) here Additional Disclosures Dodd Frank Rating Information Disclosure Form here Solicitation Status heresolicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION womens moncler jackets OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1 800 753 4824, (212) 908 0500. Fax: (212) 480 4435. Reproduction or retransmission in whole or in part is prohibited except cheap moncler jackets by permission. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and moncler outlet mall nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre existing third party verifications such as audit reports, agreed upon procedures moncler coats for kids letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent moncler coats for men and competent third party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate moncler jackets outlet online and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax moncler jacket online matters. Further, ratings and forecasts of financial and other information are inherently forward looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating moncler coats or forecast was issued or affirmed. The information in this report is provided «as is» without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the discount moncler jackets report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks moncler jackets men other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to moncler outlet uk investors by moncler jackets outlet the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason cheap moncler jackets wholesale in the sole discretion of Fitch. Fitch does not provide investment cheap moncler jackets outlet advice of any sort. Ratings are moncler jackets canada not a recommendation to buy, sell, or hold any security. 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