S&P stabilizes China State Construction view

S&P said it revised China State Construction International’s outlook to stable from negative and affirmed the company’s BBB issuer rating.

“We revised the outlook on CSCI to stable because we expect an improvement in the company's leverage over the next 24 months. CSCI's business is gaining traction after the pandemic outbreak in 2020 and it is focusing more on projects with shorter cash conversion cycle. We anticipate the company's EBITDA interest coverage will improve toward 4.5x by 2022, compared with 3.1x in 2020,” S&P said in a press release.

The agency noted that as of June 30, CSCI had an order backlog of HK$285 billion, equivalent to 4.5x of its revenue in 2020.

“With disruptions from the pandemic subsiding, the company should be able to accelerate its project execution and achieve an annual revenue growth of 13%-20% in 2021 and 2022, compared with a 1.3% increase in 2020,” S&P said.

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