Pujiang International Group Limited (Surveillance Report)

Lianhe Ratings Global Limited (“Lianhe Global”) has affirmed ‘BB-’ global scale Long-term Issuer Credit Rating of Pujiang International Group Limited; Issuer Rating Outlook Revised to Negative.

The Issuer Rating reflects Pujiang International Group Limited’s (2060.HK) (“Pujiang” or “the company”) established track record and leading position in the bridge cables and prestressed materials markets, as well as its stable margins. We expect the company to continue maintaining its market position by successfully bidding on key projects while enhancing its profitability by improving the share of higher-margin bridge cables business’s proportion in its total revenue. However, the rating is constrained by Pujiang’s limited operating scale and working capital intensive business model with a weak liquidity profile.

The Negative Outlook reflects project delays primarily due to the impact of the pandemic have pushed up Pujiang’s receivables and inventories in 2021, causing significant working capital outflow. Pujiang’s working capital gap increased. This situation could continue in 2022, and the project delays could also affect Pujiang’s revenue recognition and dampen its growth momentum.