Radiance Group Co., Ltd (Initial Issuer Report)

Lianhe Ratings Global Limited (“Lianhe Global”) has assigned a ‘BB-’ global scale Long-term Issuer Credit Rating to Radiance Group Co., Ltd. The Outlook is Positive.

The Issuer Rating reflects Radiance Group Co., Ltd.’s (“Radiance”) recognized market position in China’s property market, higher-than-peer profitability which is secured by its competitive land acquisition cost and well-managed operating expenses on its projects. However, its rating is constrained by its elevated leverage as a result of its accelerated land acquisition paces in pursuit of expanding its operating scale in the previous 2 years.

The Positive Outlook reflects our expectation that Radiance would 1) maintain a no-lower-than 30% gross margin, 2) gradually decrease its financial leverage by disciplined controlling its land acquisition expenditure and accelerating its revenue delivery pace, and 3) maintain a sustainable contracted sales growth in the next 12 to 24 months.