International rating agency Fitch Ratings downgraded Longfor Group Holdings Limited’s long-term issuer default rating (IDR), senior unsecured rating, and outstanding senior notes from BB+ to BB on October 23, with a negative outlook.
According to Hong Kong’s “Sing Tao Daily,” Fitch explained the downgrade of Longfor Group is due to the weakened liquidity buffer as a result of decreased sales and cash flow generation. The negative outlook reflects the risk that despite recent supportive policies, both the company and industry sales may take longer to stabilize.
On October 23, the official account of Guangzhou 72 Information Technology, “High Bull Finance,” reported that according to information released by Longfor Group earlier, as of the end of June 2024, the group’s total comprehensive borrowing amounted to 187.42 billion yuan, down by 5.2 billion yuan from the beginning of the year. The net debt ratio was 56.7%, cash-to-short-term debt ratio was 1.7 times, and the asset-liability ratio excluding advance receipts was 58.6%.
Longfor Group’s operational business showed growth momentum in the first half of 2024. From January to June, the company achieved operating and service revenue of 13 billion yuan, a 7.6% year-on-year increase, contributing nearly a third to the overall revenue and over 80% to the profit. Rental and property management income continued to grow, contributing a major portion of Longfor Group’s profits.
However, netizen “Mei ChengnaG” expressed concerns about Longfor Group’s current profit model: “The quality of tenants is crucial for Longfor’s property portfolio. If the tenant quality is low and vacancy rates increase, rental income stability could be affected, impacting Longfor’s cash flow. It’s important to closely monitor the operating conditions of tenants.”
Public data shows that Longfor Group was founded in Chongqing in 1993, with businesses spanning real estate development, commercial operations, rental housing, smart services, housing sales and leasing, and home decoration. Longfor Group Holdings Limited is registered in the Cayman Islands, with its headquarters located on the 15th floor of 1 Duddell Street, Central, Hong Kong.
Longfor Group Holdings Limited was listed on the main board of the Hong Kong Stock Exchange in 2009.
As of 9:46 on October 24 Beijing time, the stock price of Longfor Group was reported at 12.34 Hong Kong dollars per share, with a total market value of 84.941 billion Hong Kong dollars.