Announcement: Moody's: Franshion's 2014 results support its Baa3 issuer rating
Global Credit Research - 30 Mar 2015
Hong Kong, March 30, 2015 -- Moody's Investors Service says that Franshion Properties (China) Limited's 2014 results are in line with expectations and support its Baa3 issuer rating and stable outlook.
"Strong growth in property development revenue and stable rental income support Franshion's credit profile," says Gerwin Ho, a Moody's Vice President and Senior Analyst.
Strong growth in property development revenue has offset a decline in primary land development revenue, resulting in a 43% year-on-year increase in total revenue to HKD29.5 billion in 2014.
Property development -- which made up 74% of total revenue -- grew 126% year-on-year to HKD21.9 billion in 2014.
Meanwhile, revenue from primary land development declined 46% year-on-year to HKD3.7 billion due to weak market conditions.
Franshion reported 2% year-on-year growth in contracted sales to RMB21 billion, with a 27% year-on-year growth in property development contracted sales offsetting a 54% year-on-year decline in primary land development sales.
As a result, Moody's expects Franshion will recognize more revenue from property development contracted sales in 2015, which will support its overall revenue growth.
Franshion's gross debt level -- including 50% of perpetual convertible securities -- climbed to HKD49 billion in 2014 from HKD38 billion in 2013, as a result of its land acquisitions and project construction.
Its gross margin fell to 39.1% in 2014 from 44.4% in 2013 due to a change in its geographical mix for its property development revenue.
The higher debt level and lower gross margin reduced the company's EBITDA/interest coverage to 3.6x in 2014 from 3.7x in 2013.
Moody's expects Franshion to maintain EBITDA/interest at 3.0x-3.5x over the next 12 to 18 months, which is in line with its Baa3 rating.
Nonetheless, its revenue-to-debt ratio rose to 60% at end-2014 from 54% at end-2013. This level is lower than its peers, as it held part of its development for long-term investments.
The stable rental income from its quality investment portfolio, however, could partly mitigate this challenge. Franshion's gross rental income to gross interest expense -- including 50% of perpetual securities -- reached 0.55x in 2014.
"While Franshion's active land acquisitions and rapid expansion will increase its funding needs, we expect the company will maintain a stable credit profile and adequate liquidity to buffer its financial and execution risks," adds Ho, who is also the Lead Analyst for Franshion.
The company's increased use of joint ventures to develop sizable and high-cost projects could also partly mitigate its capital requirements and execution risks.
It had cash holdings of around HKD14.1 billion at end-2014, which covered the 3.45x in short-term debt at end-2014 (2.41x a year ago), and is also expected to support its land acquisition and construction costs in the next 12 to 18 months.
Franshion's stable outlook reflects our expectation that the company will be able to deliver contracted sales growth and maintain adequate liquidity to fund its expansion.
The principal methodology used in this rating was Global Homebuilding Industry published in March 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Listed on the Stock Exchange of Hong Kong in 2007, Franshion Properties (China) Limited is a 63.5%-owned subsidiary of Sinochem Hong Kong (Group) Company Limited. Franshion develops commercial and integrated properties in first-tier and major second-tier cities in China. It has also invested in primary land development projects in Changsha, Hunan Province, Sanya, Hainan Province and Nanjing, Jiangsu Province.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Gerwin Ho
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.Franshion Properties, vie Hongkong Code: 817 $
Announcement: Moody's: Franshion's 2014 results support its Baa3 issuer rating
Global Credit Research - 30 Mar 2015
Hong Kong, March 30, 2015 -- Moody's Investors Service says that Franshion Properties (China) Limited's 2014 results are in line with expectations and support its Baa3 issuer rating and stable outlook.
"Strong growth in property development revenue and stable rental income support Franshion's credit profile," says Gerwin Ho, a Moody's Vice President and Senior Analyst.
Strong growth in property development revenue has offset a decline in primary land development revenue, resulting in a 43% year-on-year increase in total revenue to HKD29.5 billion in 2014.
Property development -- which made up 74% of total revenue -- grew 126% year-on-year to HKD21.9 billion in 2014.
Meanwhile, revenue from primary land development declined 46% year-on-year to HKD3.7 billion due to weak market conditions.
Franshion reported 2% year-on-year growth in contracted sales to RMB21 billion, with a 27% year-on-year growth in property development contracted sales offsetting a 54% year-on-year decline in primary land development sales.
As a result, Moody's expects Franshion will recognize more revenue from property development contracted sales in 2015, which will support its overall revenue growth.
Franshion's gross debt level -- including 50% of perpetual convertible securities -- climbed to HKD49 billion in 2014 from HKD38 billion in 2013, as a result of its land acquisitions and project construction.
Its gross margin fell to 39.1% in 2014 from 44.4% in 2013 due to a change in its geographical mix for its property development revenue.
The higher debt level and lower gross margin reduced the company's EBITDA/interest coverage to 3.6x in 2014 from 3.7x in 2013.
Moody's expects Franshion to maintain EBITDA/interest at 3.0x-3.5x over the next 12 to 18 months, which is in line with its Baa3 rating.
Nonetheless, its revenue-to-debt ratio rose to 60% at end-2014 from 54% at end-2013. This level is lower than its peers, as it held part of its development for long-term investments.
The stable rental income from its quality investment portfolio, however, could partly mitigate this challenge. Franshion's gross rental income to gross interest expense -- including 50% of perpetual securities -- reached 0.55x in 2014.
"While Franshion's active land acquisitions and rapid expansion will increase its funding needs, we expect the company will maintain a stable credit profile and adequate liquidity to buffer its financial and execution risks," adds Ho, who is also the Lead Analyst for Franshion.
The company's increased use of joint ventures to develop sizable and high-cost projects could also partly mitigate its capital requirements and execution risks.
It had cash holdings of around HKD14.1 billion at end-2014, which covered the 3.45x in short-term debt at end-2014 (2.41x a year ago), and is also expected to support its land acquisition and construction costs in the next 12 to 18 months.
Franshion's stable outlook reflects our expectation that the company will be able to deliver contracted sales growth and maintain adequate liquidity to fund its expansion.
The principal methodology used in this rating was Global Homebuilding Industry published in March 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Listed on the Stock Exchange of Hong Kong in 2007, Franshion Properties (China) Limited is a 63.5%-owned subsidiary of Sinochem Hong Kong (Group) Company Limited. Franshion develops commercial and integrated properties in first-tier and major second-tier cities in China. It has also invested in primary land development projects in Changsha, Hunan Province, Sanya, Hainan Province and Nanjing, Jiangsu Province.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Gerwin Ho
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY’S (“MOODY’S PUBLICATIONS”) MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITinstance independently verify or validate information received in the rating
AW: Franshion Properties, vie Hongkong Code: 817 $ https://www.moodys.com/research/
Franshion Properties
Unternehmensprofil
Franshion Properties (China) Limited ist auf dem Immobilien- und Hotelmarkt ein Flaggschiff-Unternehmen der internationalen Aktiengesellschaft Sinochem Corporation. Seit seiner Gründung im Jahr 2004 fokussiert sich Franshion Properties auf den Bau von hochwertigen zeitgenössischen Geschäftsgebäuden in Chinas Top-City-Lagen. Dabei möchte Franshion Properties nicht nur Gebäude, sondern Sehenswürdigkeiten mit künstlerischem Anspruch errichten, in denen die Verbindung von Mensch, Bauwerk und Natur nicht zu kurz kommt. Zu den renommiertesten Projekten des Unternehmens gehören die Shanghai Fortune Plaza, der Shanghai Zhangyang Binjiang Garden und der Zhuhai Every Garden. Franshion Properties gehört auch zu den Erbauern des Internationalen Shanghai Schiffs-Service Centers und des Internationalen Passiertransport Centers am Hafen von Shanghai. Darüber hinaus investiert das Unternehmen in den Bau von Luxushotels und Spas in China. Der Unternehmenssitz ist Hong Kong.
Sinochem-Gruppe ist einer der zentralen Staatsunternehmen, die von SASAC ratifiziert wurden, um Hotels und Immobilien-Entwicklung als ihr Hauptgeschäft zu nehmen. Unsere Objektgeschäft wird majorly durch unsere Hongkong notierten Tochtergesellschaft Franshion Properties betrieben.
Franshion Immobilien hält an ihrer Geschäftsstrategie der "Bereitstellung von hochwertigen Produkten" und konzentriert sich auf die First-Tier-Städte, die zentralen Second-Tier-Städte und bekannten Ferienorten. Zum Kerngeschäft gehören die Entwicklung und der Betrieb von einer städtischen Siedlung, erstklassige Büroflächen, und gehobenen Hotels. Es ist der führende Entwickler und Betreiber von High-End-Gewerbeimmobilien.
Franshion Properties hat jetzt die Immobilienmärkte von Peking, Shanghai, Shenzhen, Zhuhai, Sanya, Lijiang, Changsha, Qingdao, Chongqing, Suzhou und Nanjing eingetragen. Der Maßstab der gehobenen Bürogebäude und Hotels gilt, und seine Betriebseffizienz alle zählen zu den Top-Playern in China, mehr als 27 Millionen Quadratmetern.
Und unterstreicht dabei die Qualität der Produkte entwickeln, die wir auch auf die nachhaltige Entwicklung der Ressourcen und die Kompatibilität zwischen unseren Produkten und der Umwelt zu konzentrieren und grünen kohlenstoffarmen Ziel zu integrieren in unsere Geschäftsstrategie. In 2011 nahm Franshion Properties "Panda Standard", eine freiwillige Emissionsreduktions Standard, den Handel Kohlenstoff-Emissionen in China ist damit der erste chinesische Unternehmen, die an diesem Projekt. Wir haben 6 Projekte Erhalt der Green Building Zertifizierung, 2 Projekte mit dem Titel "der National Model Project", und 4 Projekte zu gewinnen ", die Nationale State-of-the-art Technologie Award", unter denen die Grundschule unserer Jin Mao Mansion Projekt das erste seiner Art in China zu 3 Sternebewertung des nationalen Grüner Standard sowie LEED-Zertifizierung zu erhalten SCHOOL grün.
In Zukunft werden unsere Immobilien-Geschäft auf die High-End-Marktorientierung halten und die "Umsatzplus Holding" Geschäftsmodell, Innovation unserer Stadt Entwicklungsmodus, mehr Wert zu schaffen durch unsere "Green Strategy", und zu festigen unsere herausragende Position als die "nationale grüne ökologische Stadt-Entwickler", so unsere Position als Chinas führender Entwickler und Betreiber für die High-End-Immobilien-Entwicklung zu verbessern.
Franshion Properties, vie Hongkong Code: 817 $ https://www.moodys.com/research/Mood
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