S&P Global Ratings updated its analysis of Xinyuan Real Estate in connection with the company’s recently issued 2016 results. Key points from their analysis (full text here)
- “B” rating affirmed and outlook revised to “stable”
- 2017 contract sales forecast 12-14Bn RMB, +3% to +20% from 2016
- EBITDA margin to improve to 17-18% in 2017 from 16.5%-17.5% in 2016 and 15.4% in 2015
- Improved interest coverage due to higher EBITDA and lower interest rates paid
- Revenue to rise 20-30% in 2017
- Capex of 12-14Bn RMB in 2017. Leverage to remain high.
Chinese media (LINK) have reported that Deutsche Bank and Morgan Stanley have been appointed to arrange a new bond issue for refinancing of the 13% June 2019 bonds. Xinyuan’s 3year bond issued last year is currently trading slightly over par (quote) so I expect the refinancing to be successful. It would be nice if the company can get a 5 year term instead of 3.