30 de agosto de 2017 / 11:12 / en 3 meses

Fitch Affirms Hysan Development Company at 'BBB+'; Outlook Stable

(The following statement was released by the rating agency) HONG KONG/SHANGHAI, August 30 (Fitch) Fitch Ratings has affirmed Hong Kong-based Hysan Development Company Limited's Long-Term Issuer Default Rating at 'BBB+'. The Outlook is Stable. Fitch has also affirmed Hysan's senior unsecured rating and the rating on senior unsecured notes issued by Hysan (MTN) Limited at 'BBB+'. The rating affirmation is based on the stable performance of Hysan's Hong Kong investment property portfolio, especially its office assets, and its prudent financial management, which is evident from its low leverage and robust coverage ratio. Hysan's ratings are constrained by its relatively small scale compared with other Hong Kong property investment companies in the 'A' rating category. KEY RATING DRIVERS Stable Recurring Rental Income: Fitch expects Hysan to record flat rental revenue growth in 2017. We estimate that Hysan's retail rental income is likely to record a low single-digit decrease in 2017 due to negative rental reversions as it reshuffles some tenants towards food and beverage. However, this should be offset by the resilient performance of its office portfolio, which continues to book positive reversions in the high teens. Hysan's mature investment property portfolio, valued at HKD70 billion in mid-2017, generated stable rental income of HKD3.6 billion in the year to end-June 2017 (2016: HKD3.5 billion). Its shopping centres recorded flat revenue growth of -0.1% in 1H17 (2016: 3.5%) amid Hong Kong's subdued retail environment. However, its office leasing business was solid, with revenue growth of 5.8% in 1H17 (2016: 3.9%), due to limited supply and firm demand from Chinese financial entities, especially for grade-A offices. Clear Hub Positioning: Hysan has different branding strategies for each retail property - Hysan Place is aimed at the hip and trendy, Lee Gardens targets the luxury shopper and Lee Theatre is geared towards mass market, urban fashion and sporty lifestyle shoppers. This positioning helps expand Hysan's retail consumer base. Prudent Financial Management: Hysan does not have secured borrowings on its balance sheet. Its portion of fixed-rate debt in its total borrowing stayed at 73% at end-2016. The company also maintained a stable and long maturity profile of 4.8 years at end-June 2017 (end-2016: 4.3 years). Hysan's leverage, as measured by net debt/investment portfolio value, remained low at 4.3% in mid-2017 (end-2016: 5.3%). These metrics compare favourably with those of its Hong Kong peers. Fitch expects Hysan's leverage to stay at 4%-5% in the short to medium term. Redevelopment on Track: The redevelopment of Sunning Plaza and Sunning Court (Lee Garden Three) is scheduled to be completed in late-2017, when Lee Garden Three should also start operations. The redevelopment, which started in early 2014, requires capex of HKD2.0 billion-2.5 billion. Offices account for more than 80% of the approximately 470,000 square feet of gross floor area, among which half of the office space has received rental commitments as of end-June 2017. Fitch expects Lee Garden Three to start contributing to revenue from 2018, supported by solid demand for office space in the Causeway Bay area. The partial renovation of its residential property, Bamboo Grove, is also ongoing, leading to a drop in the occupancy rate to 84% as of end-June 2017 (2016: 82%), from 97% at end-2014 - before the renovation began. However, the renovation barely affects the company's overall performance, as the residential segment has contributed less than 10% of revenue during the previous three years. Scale Constrains Ratings: Hysan's ratings are constrained by its relatively small scale compared with other Hong Kong property investment companies in the 'A' rating category. Hysan's investment property EBITDA of HKD2.9 billion in 2016 was much less than Hongkong Land Holdings Limited's (A/Stable) HKD6.2 billion, The Wharf (Holdings) Limited's (A-/Positive) HKD12.6 billion and Sun Hung Kai Properties Limited's (A/Stable) HKD13.4 billion. DERIVATION SUMMARY Hysan's ratings are supported by its prudent financial management and resilient rental income from its investment properties in Hong Kong's Causeway Bay area. Hysan's investment property interest coverage of 15.7x in 2016 is the highest among Fitch-rated Hong Kong landlords, which ranges from 1.8x to 7.2x. Its leverage of 5.3% as of end-2016 was also lower than that of most peers, which booked above 7.0%. Hysan's ratings are constraint by its relatively small scale. Its investment property EBITDA is higher than that of Nan Fung International Holdings Limited (BBB/Stable), but lower than that of other higher-rated peers, such as Wharf and Hongkong Land. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for the issuer include: - Negative retail rental version of -15% to -10% in 2017-2018; positive office rental reversion of 20% to 15%; - Occupancy rate of 96% for office, 99% for retail and 86% for residential properties in 2017; - Capex of around HKD600 million-850 million to cover general maintenance and the Lee Garden Three redevelopment over the next two years; and - Lee Garden Three to complete its redevelopment and open in late-2017 as scheduled. RATING SENSITIVITIES Developments that May, Individually or Collectively, Lead to Positive Rating Action Fitch does not envisage positive action. Hysan's small and geographically concentrated investment property portfolio constrains its credit rating. Developments that May, Individually or Collectively, Lead to Negative Rating Action - Deterioration of investment property EBITDA/gross interest coverage below 4.0x for a sustained period (last 12 months to 1H17: 15.2x; 2016: 15.7x) - Net debt/investment property assets exceeding 30% for a sustained period (1H17: 4.3%; 2016: 5.3%) - Change in business mix away from investment property LIQUIDITY Ample Liquidity, Financial Flexibility: The company's cash and bank balances, including time deposits, stood at HKD3.4 billion as at end-June 2017 (end-2016: HKD2.6 billion), well-covering its short term debt of HKD150 million. Hysan also maintains committed undrawn facilities amounting to HKD750 million as at end-June 2017. The company's investment properties totalled HKD69.6 billion as at end-June 2017, giving rise to additional financial flexibility. Unsecured Borrowing, Note Dominated: All of Hysan's borrowings are on an unsecured basis. Debts sourced from capital markets remained high at 72.6% at end-June 2017 (end-2016: 73.4%). Contact: Primary Analyst Winnie Guo Associate Director +852 2263 9969 Fitch (Hong Kong) Limited 19/F, Man Yee Building 68 Des Voeux Road, Hong Kong Secondary Analyst Laura Long Analyst +86 21 5097 3019 Committee Chairperson Su Aik Lim Senior Director +852 2263 9914 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Corporate Rating Criteria (pub. 07 Aug 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below