China Aoyuan Group Limited (Surveillance Report)

The Issuer Rating reflects China Aoyuan Group Limited (“Aoyuan” or “the company”)’s continuous improvement in market position and brand recognition in the Chinese property market. The rating also considers the Guangzhou-based company’s adequate liquidity position and good access to financing channels. However, its high financial leverage and average profitability constrain its rating.

The Stable Outlook reflects our expectations that Aoyuan will continue to deleverage while maintaining an adequate land bank portfolio for future development. We also expect the company to improve its operating efficiency gradually by delivering projects under development at a pace more commensurate with its contracted sales growth to boost its recognized revenues in the next 12 to 18 months, in light of the lukewarm sentiment of economic growth and tightening government financial and policy measures.