Shuifa Group Co., Ltd.(Surveillance Report)

Lianhe Global has affirmed ‘A’ global scale Long-term Issuer Credit Rating of Shuifa Group Co., Ltd. (“Shuifa”); Rating Outlook Stable

The Issuer Credit Rating reflects our internal assessment on the Shandong provincial government (“Shandong government”), and the gradual shift of Shuifa’s development focus to business outside Shandong province as well as the increasing contributions from certain commercial segments. All in all, we believe there is still a high possibility that the Shandong government would provide moderately strong support to Shuifa if needed, in light of its majority ownership of Shuifa, Shuifa’s strategic position as the sole provincial level, and the major water supply and water-related project development platform in Shandong Province and the strong linkage between the Shandong government and Shuifa including management supervision, strategic alignment, and ongoing operational and financial support. In addition, the Shandong government may face negative impact on its reputation and business and financing activities should Shuifa encounter any operational or financial difficulties.

The Stable Outlook reflects our expectation that Shuifa’s business profile will remain intact while the Shandong government will continue to ensure Shuifa’s stable operation.