Moody's upgrades Golden Eagle

Moody's Investors Service said it upgraded Golden Eagle Retail Group Ltd.'s corporate family rating to Ba2 from Ba3.

Moody's also said it upgraded Golden Eagle's senior unsecured debt ratings to Ba3 from B1.

The outlook was revised to stable from positive.

The ratings reflect an expectation that the company can sustain its improved core retail operations and disciplined capital expenditure, which have improved its credit metrics over the past year, Moody's said.

The company's overall profitability also improved in 2018, the agency said.

Its operating margin improved to 36.6% in 2018, from 34.6% in 2017, reflecting successful sales contributions from new retail space, Moody's said.

The company also showed more discipline in its capital expenditures amid a weaker economic environment, reducing its spending by 75% to RMB 240 million in 2018 from RMB 962 million in 2017, the agency said.

The ratings also consider its strong market position in operating retail stores in the affluent Jiangsu province, the prime locations of the company's retail store assets and its self-owned properties to ensure business sustainability, Moody's said.

The ratings are constrained by its relatively small scale, high level of geographic concentration, intense competition in the retail industry and the risks and volatility associated with its property development business, the agency said.

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