FOSHAN, China, Sept. 30, 2018 — On September 11, when IHS Markit, the global financial information service authority, released the iTraxx Asia ex-Japan Series 30 Provisional Membership List, Country Garden entered the list for the first time. Country Garden is the only real estate developer from Mainland China on the list.
iTraxx Asia ex-Japan Series 30 Provisional Membership List has long been considered as the benchmark of Asia's investment-grade securities, as well as the “blue-chip” indicator for the bond industry. Country Garden enters this “pantheon” to take its place along with such high-quality companies and financial institutions as Tencent, Bank of China, ICBC and China Development Bank, and the national sovereign bond issuers from several countries, among them China and South Korea.
To be ranked in the list, the company or financial institution must meet three requirements: 1. The bond issuer is rated as “investment-grade”; 2. The issuer's bond maturities range from five to thirty years, meaning that organizations unable to issue long-term bonds are not entitled to enter the list; 3. The bond issuer meets the liquidation requirements of the clearing houses and has maintained an excellent record in terms of bond transactions.
IHS Markit's iTraxx Asia ex-Japan Series 30 Provisional Membership List is a bond index of investment-grade companies. The bonds included in this list have excellent liquidity in the secondary market, and their organizations have outstanding operating results. The list demonstrates those organizations' strength, efficient management, timely and transparent information disclosure, solid investor base and good relationships with investors. It shows that Country Garden's bonds are the best of Asia's investment-grade bonds.
In recent years, Country Garden achieved surprisingly rapid growth in sales and in its national ranking. Sales jumped from 17.5 billion yuan (approx. US$2.56 billion) in 2008 to 550.8 billion yuan (approx. US$80.4 billion) in 2017, topping China's real estate industry. According to the financial report for H1 2018 issued by Country Garden in Hong Kong, the real estate developer's contracted sales and sales volume continued to lead the industry, while its operating revenue, gross profit, net profit and profit attributable to shareholders grew significantly.
During the course of the rapid growth, Country Garden managed its capital well. Continuing the trend in 2016 and 2017, the real estate developer continuously maintained positive operating cash flow, reporting an available cash balance of 209.91 billion yuan (approx. US$30.7 billion), accounting for 15 percent of total assets, and unspent credit lines from banks amounting to 281.39 billion yuan (approx US$41.1 billion). The firm is well-funded and maintains a solid financial position, with a net lending ratio of only 59 percent. The net lending ratio has never once exceeded 70 percent during the 11 years since going public.
Following the announcement of its interim results, S&P, Moody's and Fitch, the world's top three rating authorities, maintained their rating and outlook for Country Garden. Fitch rated the real estate developer's BBB-Enterprise Credit Rating as investment-grade. Top international investment banks, including Goldman Sachs, JPMorgan Chase & Co., Morgan Stanley and Deutsche Bank, all expressed optimism in their comments about the developer. JPMorgan Chase & Co. maintained the “Overweight” rating, while Deutsche Bank named Country Garden as one of its preferred stocks.
While the real estate developer's steady growth is receiving positive feedback from the capital market and investors, it continues to strengthen its own management and adjust its roadmap in a move to adapt to changes in the market. Country Garden has stated that it plans to gradually move into the next stage of the company's development characterized as steady, healthy and sustainable where the focus will be on a continued improvement in quality and a more modest rate of growth.
SOURCE Country Garden Holdings
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