Fitch affirms LVGEM (China)

Fitch Ratings said it affirmed LVGEM (China) Real Estate Investment Co. Ltd.'s long-term foreign-currency issuer default rating at B.

The outlook is stable.

The agency also affirmed LVGEM's senior unsecured rating and the rating on its outstanding dollar-denominated senior notes at B. The recovery rating on its senior unsecured rating is RR4.

“LVGEM's ratings are supported by its high-margin urban redevelopment projects in Shenzhen and its portfolio of quality investment properties, including its centrally located Shenzhen NEO Tower office buildings,” the agency said in a news release.

“LVGEM's recurring EBITDA/gross interest paid was 0.59x at end-2017, higher than most of its B rated peers. LVGEM is also expecting its controlling shareholder, Mr. Wong Hong King, to inject around 12 million sq m in urban redevelopment projects into the company.

“However, LVGEM's ratings are constrained by its small and fluctuating sales, limited geographical concentration and high leverage.”

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