S&P cuts Gemdale, withdraws ratings

S&P said it downgraded the issuer ratings on Gemdale Corp. to BB- from BB and its subsidiary Famous Commercial Ltd. to B+ from BB-. At the companies’ request, the agency withdrew the ratings. The outlook was negative at the time of withdrawal.

“In our view, Gemdale Corp.'s large exposure to joint-venture (JV) projects involves higher operational risk and contagion financial risk amid distress in a number of its JV partners.

“We expect the company to continue its prudent land investment strategy in the next 12 months. However, due to the consumption of quality land bank and less new acquisitions in 2022, we expect Gemdale's contracted sales to further weaken by 8%-10% in 2023, after a 20-25% decline in 2022, given the market remains weak. This will shrink revenue by 8%-13% annually in 2023 and 2024,” S&P said in a press release.

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