LVGEM (China) Real Estate Investment Company Limited (Initial Issuer Report)

The Issuer Rating reflects LVGEM (China) Real Estate Investment Company Limited’s (“LVGEM” or “the company”) niche operation model in urban renewal industry, steadfast affinity to business partners, and a tactical land-banking arrangement with its major shareholder, all of which support robust gross margins at approximately 60%.

The rating also considers the anticipated inclusion of Bai Shi Zhou redevelopment project in the Nanshan District of Shenzhen which will likely strengthen LVGEM’s land bank quality and size while boosting its business scope.

The Stable Outlook reflects our expectation that LVGEM will maintain its performance metrics and leverage within the rating horizon in the next 12 to 24 months while expanding its operating scale in a prudent manner. Rating constraints include the company’s small operating scale, acceptable liquidity profile, and high financial leverage.