Moody's changes Yanlord view to stable

Moody's Investors Service said it changed the outlook to stable from negative and affirmed Yanlord Land Group Ltd.'s Ba2 corporate family rating and the Ba3 backed senior unsecured rating on the bonds issued by Yanlord Land (HK) Co., Ltd., a wholly-owned subsidiary of Yanlord, and guaranteed by Yanlord.

"The change in outlook to stable from negative reflects our expectation that Yanlord's credit metrics will continue to improve over the next 12-18 months, supported by its strong revenue growth and controlled debt increase," said Cedric Lai, a Moody's vice president and senior analyst, in a press release.

The agency said it forecasts Yanlord's EBIT/interest coverage will improve to 3.5x-4x over the same period from 3x in 2020, reflecting revenue growth and receding interest costs, which will more than offset Moody's anticipated decline of gross profit margin.

“The company's gross profit margin will likely weaken to around 28% in the next 12-18 months from 36% in 2020, due to rising land costs and regulatory measures on property selling prices in its home base,” Moody’s said.

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