Moody's cuts China Automation view to negative

Moody's Investors Service said it changed to negative from stable the outlook of China Automation Group Ltd.'s Ba3 corporate family and senior unsecured bond ratings after the company issued a profit warning on Jan. 16.

Moody's also affirmed both ratings.

The change in outlook reflects the company's slowing top-line growth and deteriorating profitability against the backdrop of a challenging operating environment for railway equipment suppliers in China, the agency said.

Capital expenditure in the Chinese railways sector has been significantly slowed by the Ministry of Railways after the high-speed train accident in Wenzhou last year, the agency said.

Moody's also said it expects the ministry to be more selective and cautious in order placements, which will unfavorably impact equipment suppliers.

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