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Global Home > Corporates

China's Food Security is Ensured, but a Long-Term Challenge

China has been largely self-sufficient in major agricultural products, underpinned by strong domestic production, though ensuring long-term food security is not without challenges.


Related Press Release:
China's Food Security is Ensured, but a Long-Term Challenge

Diversification, Scale the Key Differentiators for Chinese Industrials

The outlook for the sector is stable, as these entities are generally geared conservatively compared with similarly rated peers in developed markets. Investment-grade issuers in China have low financial leverage - none have FFO adjusted net leverage of Chinese diversified manufacturing companies tend to be exposed to specific sub-segments of the economy with sector-specific demand drivers and cycles.

Profits of Sino-Foreign Automaker Joint-Ventures Deteriorate

We expect leading JVs to resume yoy sales volume and revenue growth in 2H19 and to achieve stronger margins due to narrower price discounts and moderate promotions. However, overall profitability is set to trend down over the medium- to long-term on intensifying market competition and upcoming launches of low-margin new-energy vehicles (NEV).

EU's High CO2 Prices to Accelerate Utilities' Transition

Fitch Ratings says the high carbon dioxide (CO2) price environment in the EU is mitigated by external and internal factors in the medium-term and thus rating-neutral to carbon-intensive utilities. However, it will accelerate the industry's transition in the longer-term when these mitigating factors disappear.

China's Online Retail Grows Fast, Supported by New Platforms

We see new retail (online purchases delivered from offline stores via intra-city on-demand delivery) and social e-tailing (sales via social networking applications) as the two main engines behind the accelerated growth in online sales in China.

Indian Automakers' Challenges to Persist After Weak 1Q

Domestic sales trends have weakened since 1HFY19 as the constrained liquidity at non-bank lenders reduced credit availability to buyers and the cost of ownership rose due to new regulations mandating enhanced vehicle insurance cover and additional safety features.

Property Quality Continues to Underpin Australian REIT Results

Retail exposures remain challenged in the face of structural industry change, although larger properties in capital cities continue to fare better than those in regional locations, while office and industrial property valuations and high occupancy levels continue to benefit from limited supply and strong demand, particularly in Sydney and Melbourne.

Indonesia Auto Sales to Slow Amid Rate Cuts; AUTO's Credit Profile Remains Solid

Bank Indonesia's interest-rate cuts, which should drive consumer-lending rates lower, are unlikely to lead to a strong rebound in auto sales and four-wheeled vehicles sales will probably continue to slow in 2019.

China POEs' Debt-for-Equity Swaps Face Significant Bank Hurdles

The National Development and Reform Commission (NDRC) aims to reduce POEs' credit risks and rejuvenate the private sector by encouraging more POEs to pursue market-oriented debt-for-equity swaps with financial institutions, according to the commission's working guidelines for corporates to reduce leverage released 29 July 2019.

Saudi Aramco Posts Strong Cash Flows, Boosting M&A Prospects

Saudi Aramco's strong cash flow generation and its net cash position could support further acquisitions.

Fitch Ratings Revises Global Fertiliser Price Assumptions

Fitch Ratings' fertiliser pricing assumptions have been revised, reflecting underlying market dynamics, but we do not expect any rating changes as a result of these revisions. 

EMEA Rated REITs' Limited Exposure to WeWork-type Flexi-Offices

European office property companies that we rate have a low exposure to WeWork or other specialised flexi-office providers.

New Rules to Limit Chinese Corporates and LGFVs' Offshore Issuance

The Chinese regulator's recent changes in rules for offshore bond issuance by homebuilders and LGFVs are likely to keep Chinese corporate annual issuance flat in 2019, and will effectively cap it at this level in 2020.

RelatedNew Rules to Limit Chinese Corporates' Offshore Issuance

NBFI Funding Squeeze to Hit Indian Property Developers Hardest

NBFIs are now also shying away from refinancing maturing debt of even large, proven developers to limit concentration risk to the sector. This is pushing developers towards alternative funding channels, such as private equity.

Margins Narrow for Indian Steelmakers in 1QFY20, Raising Credit Risks

We anticipated a margin squeeze this year, but the weakness in domestic demand and the impact on sales volume were greater than expected. Further margin erosion and persistent weakness in demand could have rating implications as the rating headroom for these companies in terms of debt-to-EBITDA leverage is limited.

Korean Telcos to Accelerate Capex on Fast 5G Uptake

We expect 5G penetration to revive wireless revenue growth in the short term. Both SK Telecom Co., Ltd (A-/Negative) and KT Corporation (A/Stable) achieved a turnaround in wireless revenue growth in 2Q19 after several quarters of decline caused by government-driven tariff cuts in 2017.

Chinese Steel Production to Drop After Rising to Record in 1H19

We expect steel production to decline in 2H19 due to three factors - a slowdown in housing construction, production restrictions led by environmental measures and market-driven production cuts on shrinking steelmaker margins.

China's Renewable Capacity Additions Recover after Policy Changes

New solar installation recovered in 2Q19 from the previous quarter, as solar projects approved in 2018 were required to start operations before July 2019 to qualify for higher feed-in tariff. Wind capacity additions, which were 58% higher in 2Q19 than a year earlier, are likely to maintain growth throughout the year.

Additional Tariffs Raise Domestic Sales Risks on Indonesian Garment and Textile Sector

An Indonesia textile manufacturer focused on domestic sales - PT Delta Merlin Dunia Textiles (DMDT, CCC-) - said in July 2019 that it is facing financial difficulties due to increased competition from an influx of Chinese-made fabrics into the domestic market, among other reasons.

APLN's and DMDT's Financial Woes Not Indicative of HY Indonesian Liquidity Issues

Fitch Ratings believes the financial difficulties facing PT Agung Podomoro Land Tbk (APLN) and PT Delta Merlin Dunia Textile (DMDT) are not indicative of systemic liquidity challenges among the agency's rated portfolio of high-yield Indonesian corporates.

New Rules to Limit Chinese Corporates' Offshore Issuance

In a move which aims to control the potential systemic risk caused by excessive leverage, the National Development and Reform Commission (NDRC), the Chinese macroeconomic management agency, has limited the use of proceeds from new issuance for homebuilders and LGFVs that are "local state-owned enterprises undertaking financing tasks for local governments".

 

Related Report:
China Corporate Funding, Liquidity and Defaults - July 2019

Chinese Infrastructure Growth May Rise on Looser Measures for Special Bond Issuance

China reported a weaker set of economic data in 2Q19 despite the earlier easing measures. GDP slowed to 6.2% in 2Q19, the slowest pace since 1992, as demand faltered due to the US trade pressure. Total fixed-asset investment (FAI) grew by 5.8% yoy in 1H19, moderating from 6.3% in 1Q19.

 

Related Report:
China Fixed Asset Investment Quarterly Watch - 2Q19

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