A New Reprise Concerning Finance


'Moderate' Socio-Political Implications: The company is a holding group and all its businesses are operated by subsidiaries. A default by the company may not result in immediate disruption of its business activity and would have a moderate socio-political impact on the municipal government. 'Very Strong' Financial Implications: The company has borrowed substantially from banks and the onshore and offshore debt markets over the past few years. A default by YUCH would damage the reputation of the government and affect funding for other enterprises owned by the municipality. The government would have very strong incentive to avoid a company default. 'b+' Standalone Credit Profile: The company's Standalone Credit Profile (SCP) is assessed under Fitch's Public Sector, Revenue-Supported Entities Rating Criteria. We raised YUCH's SCP to 'b+' from 'b' after we reassessed its revenue defensibility at 'Midrange' from 'Weaker' because it consolidated the two GREs in Yangzhou that were transferred by the government and we expect its revenue to rise significantly in 2020. The operating risk is assessed at 'Midrange' because the company receives large amounts of government subsidies each year to cover clicking here its operating costs. The financial profile is assessed at 'Weaker', which reflects the company's high leverage, with net debt/EBITDA of around 11x at end-2019. The weak SCP is mitigated by its strategic links with the government, which may provide financial support to the company. YUCH's rating is derived from the four factors under Fitch's Government-Related Entities Rating Criteria, combined with the 'b+' SCP under our Public Sector, Revenue-Supported Entities Rating Criteria.