Moody's rates China Wanda B1

Moody's Investors Service said it assigned a first-time B1 corporate family rating to China Wanda Group Co., Ltd.

The outlook is stable.

The rating reflects the company's improved profitability, underpinned by the annual crude oil import quotas it receives from the Chinese government, Moody's said.

The refining segment is the company's largest business segment, accounting for 56% and 58% of total revenue and gross profits, respectively, in 2017, the agency said.

China Wanda's annual import quota for 4.4 million tons of crude oil has helped lower its refining costs and improve the segment's gross margin, Moody's said.

The agency also said it expects the company's adjusted EBITDA margin to soften slightly to about 16% over the next 12- to 18-months from a high of 16.4% in 2017.

The ratings also factor in its growing track record of expanding its operations and building a strong customer base, Moody's said, as well as its diversified business portfolio.

The ratings are constrained by its small refining scale with concentration risk in a single site, its exposure to China's evolving policies and regulations, the agency said, and execution risks associated with its large debt-funded expansion.

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