Fitch rates Shimao Property notes BBB-

Fitch Ratings said it assigned Shimao Property Holdings Ltd.’s (BBB-/stable) proposed yuan-denominated offshore senior notes a BBB-(EXP) expected rating.

The notes are rated at the same level as Shimao's senior unsecured rating as they constitute its direct and senior unsecured obligations.

Fitch said the ratings are supported by Shimao’s focus on maintaining high margins from its high-quality and well-located land bank rather than increasing contracted sales. Its contracted sales increased to RMB 101 billion in 2017, from around RMB 67 billion each year for 2013-2016, while its cash collection of contracted sales was a healthy 80%-88% during 2013-2016.

The homebuilder maintained an EBITDA margin of 26%-27% in 2015-2016, which is comparable with other BBB to BBB+ rated peers, the agency explained.

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