Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Dalian Wanda - Preparing for the Inevitable?

China: Slower Land Sales Growth In 40 Major Cities But Acquisitions By Major Developers Rise 40%

Sustainable High Yield from Guangzhou R&F?

Asia ex-Japan Credit - Analyst, Bondcritic

Brayan Lai

Asia ex-Japan Credit - Analyst

Credit

<p>Guangzhou R&amp;F (“the group” or “R&amp;F”) is a mid-sized Chinese property developer with a strong entrenched product and execution track record in predominantly Tier 1 and 2 residential/commercial property markets such as Guangzhou, Beijing and Tianjin. It has embarked on nationwide ambitions in recent years by venturing into Tier 3 and 4 cities, but not quite at the scale or magnitude of some of its nationwide peers. Nevertheless, it does share similar attributes to some of its more aggressive peers through the group’s extensive use of trust finance and perpetual capital instruments. Hence, overleverage has been a concern in recent years.</p><p>In our opinion, R&amp;F’s strong business profile has been offset by lower financial flexibility due to its use of leverage. We concede that the addition of recurring income (via its recent acquisition from Wanda Group) from hospitality assets would be a buffer towards its fixed charges going forward (good long-term diversification). However, this comes at a cost by continued tie-up of substantial amounts of short and long-term capital, which can slow its churn. Given the group’s strategy, we think organic deleveraging through churn is not impossible albeit highly optimistic. We would place a very little weight on any inorganic/external deleveraging in the near foreseeable future.</p>

Guangzhou R&amp;F (“the group” or “R&amp;F”) is a mid-sized Chinese property developer with a strong entrenched product and execution track record in predominantly Tier 1 and 2 residential/commercial property markets such as Guangzhou, Beijing and Tianjin. It has embarked on nationwide ambitions in recent years by venturing into Tier 3 and 4 cities, but not quite at the scale or magnitude of some of its nationwide peers. Nevertheless, it does share similar attributes to some of its more aggressive peers through the group’s extensive use of trust finance and perpetual capital instruments. Hence, overleverage has been a concern in recent years.In our opinion, R&amp;F’s strong business profile has been offset by lower financial flexibility due to its use of leverage. We concede that the addition of recurring income (via its recent acquisition from Wanda Group) from hospitality assets would be a buffer towards its fixed charges going forward (good long-term diversification). However, this comes at a cost by continued tie-up of substantial amounts of short and long-term capital, which can slow its churn. Given the group’s strategy, we think organic deleveraging through churn is not impossible albeit highly optimistic. We would place a very little weight on any inorganic/external deleveraging in the near foreseeable future.

Dalian Wanda Commercial Properties (1567411D HK)

Guangzhou R&F: Repricing The Business Model

Guangzhou R&F Properties

Guangzhou R&F: Repricing The Business Model