Yuzhou Properties Company Limited (Initial Issuer Report)

Lianhe Ratings Global Limited (“Lianhe Global”) has assigned a ‘BB’ global scale Long-term Issuer Credit Rating to Yuzhou Properties Company Limited (“Yuzhou”). The Outlook is Stable.
The Issuer Rating reflects Yuzhou’s established market position in the Chinese property market, which is evident by its strong contracted sales growth, a higher-than-peer gross margin, and high-quality land bank primarily located in tier 1 and 2 cities in China. However, Yuzhou’s rating is constrained by its elevated financial leverage as compared with its peers.
The Stable Outlook reflects our expectation that Yuzhou would continuously maintain a gross margin above 30% and expand its operating scale through active land acquisitions to sustain its contracted sales growth while managing its debt growth at a moderate level.