Lianhe Ratings Global Limited (“Lianhe Global”) has upgraded the global scale Long-term Issuer Credit Rating of China Hongqiao Group Limited to ‘BBB-’ from ‘BB+’; Issuer Rating Outlook revised to Stable.
The Issuer Rating upgrade to ‘BBB-‘ reflects China Hongqiao Group Limited’s (1378.HK) (“China Hongqiao” or “the company”) continued improvement in profitability and operating performance, improving financial performance and matrix supported by the prevailing high aluminum prices, along with its established leading market position and cost advantage backed by its vertically integrated production platform and economy of scale. However, China Hongqiao’s rating is constrained by the cyclical nature of the aluminum industry and its regulation and concentration risks.
The Stable Outlook reflects our expectation that China Hongqiao will maintain its operating performance and operating efficiency, which enables the company to mitigate the cyclical nature of the industry. Moreover, the production capacity migration will further enhance the company’s competitive advantage.