Haiyang State-owned Capital Operation Group Co., Ltd. (Initial Issuer Report)

Lianhe Ratings Global Limited (“Lianhe Global”) has assigned ‘BBB’ global scale Long-term Issuer Credit Rating with Stable Outlook to Haiyang State-owned Capital Operation Group Co., Ltd. (“HSCOG” or “the company”)

The Issuer Credit Rating reflects a high possibility that the People’s Government of Haiyang City, Yantai City (“Haiyang government”) would provide very strong support to HSCOG if needed, in light of its full ownership of HSCOG, HSCOG’s strategic importance as the sole local investment and development company (“LIDC”) that is responsible for infrastructure construction and shantytowns renovation in Haiyang County, Yantai City (“Haiyang”), and the linkage between the Haiyang government and HSCOG, including appointment and supervision of the senior management, strategic alignment, major investment and financing plan decisions and ongoing operational and financial support. In addition, the Haiyang government may face significant negative impact on its reputation and financing activities if HSCOG encounters any operational and financial difficulties.

The Stable Outlook reflects our expectation that HSCOG’s strategic importance would remain intact while the Haiyang government will continue to ensure HSCOG’s stable operation.