CORPORATES

SECTOR IN-DEPTH Nonfinancial Companies – 24 June 2021 Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment

TABLE OF CONTENTS » Economic recovery drives revenue and earnings growth; leverage varies. Rising Summary 1 demand for goods and services in China (A1 stable), driven by the country's GDP growth, Auto and auto services 6 will benefit most rated companies this year and next. Leverage trends will vary by sector. Chemicals 8 Strong demand growth in certain sectors has increased investment requirements, which in Construction and engineering 10 turn could slow some companies’ deleveraging efforts. Food and beverage 12 Internet and technology 14 » EBITDA growth will outpace debt growth for auto and auto services, food and Metals and mining 16 beverages, and technology hardware. As a result, leverage will improve for rated Oil and gas 18 companies in these sectors. A resumption of travel, outdoor activities and business Oilfield services 20 operations, with work-from-home options, as the coronavirus pandemic remains under Property 22 control in China will continue to drive demand. Steel, aluminum and cement 24 Technology hardware 26 » Strong demand and higher pricing will support earnings growth for commodity- Transportation 28 related sectors. These sectors include chemicals, metals and mining, oil and gas, oilfield Utilities 30 services, steel, aluminum and cement. Leverage will improve as earnings increase. Carbon Moody's related publications 32 transition may increase investments for steel, aluminum and cement companies. But List of rated Chinese companies 34 rated companies, which are mostly industry leaders, will benefit in the long term because of market consolidation. Contacts » High spending needs will stall deleveraging for construction and engineering Lina Choi +852.3758.1369 companies despite solid revenue, EBITDA growth. A solid order backlog will drive the Senior Vice President [email protected] growth. But leverage will remain flat because of additional debt for project development. Ying Wang +852.3758.1327 » Greater competition as a result of the antitrust regulations will reduce EBITDA VP-Senior Analyst margin for internet and technology companies. Revenue growth will remain solid at [email protected] 15%-20%, supported by accelerated migration of consumption to online from offline. But Hong Wong +852.3758.1660 EBITDA growth will be slower than revenue growth for most rated companies as selling, Associate Analyst [email protected] marketing and research and development (R&D) costs rise. Most rated companies have low leverage, strong cash positions and diversified funding access to help them weather Clement Wong +852.3758.1561 Associate Managing Director potentially negative effects from tightened regulations. [email protected] » Rated developers’ leverage and interest coverage ratios will improve with solid revenue growth and debt controls. The developers’ weighted average revenue/ adjusted debt ratio will improve because the solid contracted sales in the past few years will support revenue growth. Regulatory controls and developers’ efforts to scale back land acquisitions will slow debt growth. MOODY'S INVESTORS SERVICE CORPORATES

» Transportation and utilities companies’ leverage will improve, but spending needs will remain high. Toll road companies’ revenue will recover from the 2020 trough, driven by a resumption in traffic volumes and the end of the toll-free policy imposed in the first half of 2020. The energy demand recovery in China will benefit rated power and gas utilities companies. These recoveries will drive leverage improvement in both sectors. But spending needs will remain high: for toll roads companies to support continued urbanization, and for utilities to develop renewable energy projects.

Exhibit 1 Most rated Chinese companies are investment grade; percentage of such companies has risen since November 2020

Unless otherwise specified, rated portfolio data are as of 15 June 2021; rated debt data as of 31 May 2021 Source: Bloomberg and Moody's Investors Service

2 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Exhibit 2 Earnings and cash flow rising with GDP for all sectors in 2021

Bond data as of 31 May 2021. Source: Bloomberg, Moody's Investors Service and Moody's Investors Service estimates

3 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Exhibit 3 Exhibit 4 Rated bond issuance of investment-grade companies in first five months of 2021 reached Rated bond issuance of high-yield companies in first five months of 2021 totaled USD 11.8 USD 21 billion billion

Rated bond issuance (left axis) Weighted average coupon Average tenor Rated bond issuance (left axis) Weighted average coupon Average tenor 60 14 50 14 12.6 45 50 12 12 40 8.6 10 8.9 9.4 35 8.7 8.9 10 40 8.3 8.5 30 6.0 8 7.1 7.8 8 30 25 6.2 6 6 4.4 20 20 3.7 3.4 3.6 4 15 4 2.7 2.9 3.8 10 10 2 4.2 3.9 3.4 2 5 2.9 2.9 Moody's rated issuance ($ billion) ($ issuance rated Moody's Moody's rated issuance ($ billion) ($ issuance rated Moody's 0 0 0 0 2016 2017 2018 2019 2020 5M2021 2016 2017 2018 2019 2020 5M2021 Exhibit excludes infrastructure companies. Exhibit excludes infrastructure companies. Sources: Moody’s Investors Service, Dealogic and Bloomberg Sources: Moody’s Investors Service, Dealogic and Bloomberg

Exhibit 5 Exhibit 6 Market can absorb bond maturities in the next few years Onshore bonds account for most maturities through 2025 Issuance in recent years exceeds maturities through 2025 Investment Grade High Yield Onshore Offshore 400 250 350 300 200 250 200 150 150 USD billionUSD 100 100 50 USD billion 0 50 2017 2018 2019 2020 Jan-May Jun-Dec 2022 2023 2024 2025 2021 2021 0 Bonds Outstanding by Year of Issuance Maturities Jun-Dec 2021 2022 2023 2024 2025

Data include rated and unrated onshore and offshore bonds issued by Moody’s-rated Chinese nonfinancial companies Data include rated and unrated onshore and offshore bonds issued by Moody’s-rated Chinese nonfinancial companies during each period that are outstanding as of 31 May 2021. during each period that are outstanding as of 31 May 2021. Sources: Moody’s Investors Service and Bloomberg Sources: Moody’s Investors Service and Bloomberg

4 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Auto and auto services - Unit sales to recover in 2021 as economic growth rebounds

Exhibit 7 Exhibit 8 Rating distribution Outlook distribution

Data as of 15 June 2021; seven rated companies Data as of 15 June 2021; seven rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 9 Exhibit 10 Unit sales will rise in 2021, driven by economic recovery; sales Dongfeng, Geely and Beijing Auto’s leverage will improve in 2021 growth will slow in 2022 from normalized base and 2022 as EBITDA increases with unit sales

Dongfeng Motor Group Beijing Auto Geely Dongfeng Motor Group Beijing Auto Geely 25% 5x

20%

15% 4x

10% 3x year growth % year

- 5% on - 0% 2x -5% Adjusted debt/EBITDAAdjusted -10% 1x

Unit sales year Unitsales -15%

-20% 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E Beijing Auto and Dongfeng unit sales include 100% of their respective joint ventures' sales. Financial metrics for Dongfeng are based on financials after adjusting for the pro rata Sources: Company information, China Association of Automobile Manufacturers (CAAM) and consolidation of its key joint ventures. Moody's Investors Service estimates Beijing Auto's financials and credit metrics are based on Beijing Auto's company financials that account for the Beijing Benz JV on a consolidated basis and account for the Beijing Hyundai JV on an equity method basis. Our analysis of Geely's financial metrics accounts for the 50%-owned Lynk & Co joint venture on a consolidated basis. Sources: Moody’s Financial Metrics and Moody's Investors Service estimates

5 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Auto and auto services - Unit sales to recover in 2021 as economic growth rebounds Credit trends and developments to monitor

» China’s robust economic recovery in 2021 will support a rise in auto unit sales

» Rebound in unit sales in 2021 is off a low base as auto sales fell three consecutive years during 2018-20

» Impact of investments in research and product development relating to electric vehicles on profitability

Companies of interest

» China Grand Automotive Services Grp Co., Ltd's (B1 negative) leverage will decrease to around 6.0x-6.5x over the next 12-18 months. China Grand Auto's debt leverage, measured as Moody's-adjusted debt/EBITDA, was about 8.7x as of 31 December 2020, mainly because of its weak performance as a result of the pandemic.

» Geely’s (Baa3 stable) product breadth and strength will improve, supported by the expansion of its new energy vehicle and Lynk & Co joint venture model lineup

» Zhongsheng (Baa3 stable) will maintain its prudent financial policy and grow its business given its solid brand portfolio, high exposure to the luxury segment and efficient operation management

6 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Chemicals – Credit metrics will improve, driven by higher earnings and stable debt

Exhibit 11 Exhibit 12 Rating distribution Outlook distribution

Data as of 15 June 2021; seven rated companies Data as of 15 June 2021; seven rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 13 Exhibit 14 Rising demand and prices will boost revenue Improving leverage driven by higher earnings and stable debt

Revenue - ChemChina (left axis) Revenue - Huayi (left axis) ChemChina Huayi Specialty chemical Revenue - Specialty chemical (left axis) EBITDA margin - ChemChina (right axis) 16x EBITDA margin - Huayi (right axis) EBITDA margin - Specialty chemical (right axis) 14x 35% 500 30% 12x

400 25% 10x 20% 300 8x 15%

RMB billionsRMB 200 10% 6x Adjusted EBITDA Adjusted EBITDA % margin 100 5% debt/EBITDA Adjusted 4x

- 0% 2018 2019 2020 2021E 2022E 2x “Specialty chemical” reflects weighted average of Wanhua, Bluestar, Yingde Gases and 0x Tianqi Lithium. 2018 2019 2020 2021E 2022E Sources: Moody’s Financial Metrics and Moody's Investors Service estimates “Specialty chemical” reflects weighted average of Wanhua, Bluestar, Yingde Gases and Tianqi Lithium. Sources: Moody’s Financial Metrics and Moody's Investors Service estimates

7 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Chemicals - Credit metrics will improve, driven by higher earnings and stable debt Credit trends and developments to monitor

» Chemical prices and demand will increase, supported by macroeconomic growth

» Rated companies’ leverage will decline as revenue and EBITDA increase but debt remains stable

» Industry consolidation and integration will likely increase under China’s state-owned enterprise reform initiative; one example is the joint restructuring of ChemChina (Baa2 stable) and

Companies of interest

» Joint restructuring of ChemChina and Sinochem is credit positive for both companies, but has no immediate rating impact on ChemChina, Sinochem and their rated subsidiaries, pending detailed restructuring plan

» We expect ChemChina will resume deleveraging in 2021, supported by the improving performance of its business portfolio and the restructuring with Sinochem

» Wanhua (Baa2 stable)’s business has been resilient during the industry downturn in 2020. We expect Wanhua's recently deployed ethylene integrated project to materially expand its operating scale, further improve the integration of the company's operations and support its product diversification. Given the likely expansion, we will monitor if the company will sustain free cash flow generation during the expansion.

» Yingde Gases (Ba2 stable)’s corporate family rating reflects Yingde Gases' improving operating scale, client diversification, proven business resilience and longer track record of prudent financial management with low leverage since PAG Asia II LP took ownership of the company in 2017. Since its parent, PAG Asia II LP, took ownership of the company in 2017, Yingde Gases has managed to generate positive free cash flow while maintaining its leverage, as measured by total adjusted debt to EBITDA, at below 2.5x, which is strong for its rating category.

8 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Construction and engineering – Leverage will remain stable as debt growth offsets earnings increase

Exhibit 15 Exhibit 16 Rating distribution Outlook distribution

Data as of 15 June 2021; 12 rated companies Data as of 15 June 2021; 12 rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 17 Exhibit 18 Revenue growth will remain strong, backed by record-high order Leverage will be stable as debt and EBITDA grow at similar pace book

Revenue (left axis) Adjusted total debt (left axis) Revenue growth year-on-year - weighted average (right axis) Adjusted debt/EBITDA - simple average (right axis) 8 20% 4 10x

7 9x 8x year % year

6 15% - 3 7x on - 5 6x 4 10% 2 5x

3 4x RMB RMB tillions RMB RMB tillions 3x 2 5% 1 2x debt/EBITDA Adjusted 1 1x Revenuegrowth year 0 0% 0 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E Exhibit shows averages for eight of the rated Chinese construction companies: Exhibit shows averages for eight of the rated Chinese construction companies: China Communications Construction, Construction Group, China Railway China Communications Construction, Shanghai Construction Group, China Railway Construction, China Railway Group, China Metallurgical Group Corporation, China State Construction, China Railway Group, China Metallurgical Group Corporation, China State Construction Engineering, Power Construction Corporation of China and China Energy Construction Engineering, Power Construction Corporation of China and China Energy Engineering. Engineering. Sources: Moody’s Financial Metrics and Moody's Investors Service estimates Sources: Moody’s Financial Metrics and Moody's Investors Service estimates

Credit trends and developments to monitor

» Rated construction companies’ revenue will increase around 10%-12% in 2021 and 2022, driven by a large volume of new orders for domestic construction projects

» Their adjusted debt/EBITDA will be stable; revenue and EBITDA will increase but so will debt to fund public-private partnerships (PPP) and property development

» Deleveraging measures such as asset sales, equity raising and other asset monetization efforts will help companies fund investments and keep leverage stable

Companies of interest

» China Railway Group’s (A3 stable) leverage will be stable in 2021 as strong earnings increase will be offset by debt increase to fund PPPs and property development

» China Communications Construction’s (Baa1 stable) leverage will improve as the company‘s overseas businesses recover from the negative impact of the pandemic, which will bolster EBITDA and in turn lower leverage

9 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Food and beverage – Strong cash flow and stable profitability drive leverage improvement

Exhibit 19 Exhibit 20 Rating distribution Outlook distribution

Data as of 15 June 2021; seven rated companies Data as of 15 June 2021; seven rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 21 Exhibit 22 Revenue resumes growth as coronavirus disruptions fade Leverage will also improve with strong EBITDA growth

Revenue (left axis) 2.0x Revenue year-on-year growth - weighted average (right axis) 550 20% 1.8x

500 18% 1.6x 450 16% 1.4x 400 14% 1.2x 350 12% 1.0x

300 % growth year - 10% on 250 - 0.8x

RMB billionsRMB 8%

200 Adjusted debt/EBITDA 0.6x 6% 150 0.4x

100 4% yearRevenue 0.2x 50 2%

- 0% 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E Exhibits show averages for six rated Chinese food and beverage companies: China Mengniu Exhibits show averages for six rated Chinese food and beverage companies: China Mengniu Dairy, China Want Want, Health & Happiness, Inner Mongolia Yili Industrial Group, Tingyi Dairy, China Want Want, Health & Happiness, Inner Mongolia Yili Industrial Group, Tingyi Holdings and WH Group. Holdings and WH Group. Sources: Moody’s Financial Metrics and Moody's Investors Service estimates Sources: Moody’s Financial Metrics and Moody's Investors Service estimates

10 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Food and beverage - Strong cash flow and stable profitability drive leverage improvement Credit trends and developments to monitor

» Demand for packaged food and beverages will remain strong as travel and outdoor activities resume

» Product upgrades and efficiency improvements will offset raw material cost increases and keep profitability stable

» Strong EBITDA growth will drive leverage improvement for most rated companies

Companies of interest

» Yili (A3 stable) and Mengniu’s (Baa1 stable) strong cash buffer and strong EBITDA generated from demand for dairy products support investment requirements. Despite the adverse impact from the coronavirus pandemic in first half 2020, the company's steady profitability and cash flow generation allowed it to maintain its leverage in 2020 because of a rapid recovery in the second half.

We expect revenue will increase by a low- to mid-teen percentage in 2021, underpinned by increased demand for dairy products, while China (A1 stable) keeps the pandemic under control and Yili's diversified product portfolio supports its strong market position.

» Tingyi’s (A3 stable) balanced product portfolio and financial prudence support its steady performance. We upgraded Tingyi in April 2021 from Baa1, reflecting Tingyi's consistently prudent financial policy and its resilient business model, which support a track record of free cash flow generation, low leverage and a solid net cash position.

» WH Group’s (Baa2 stable) proposed share buyback of up to US$1.9 billion announced on 6 June 2021, if fully implemented, will be credit negative, but its strong cash position, solid cash flow generation and currently low leverage provide buffer and we expect the company can rebuild its cash buffer and deleverage in the next 12-18 months.

11 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Internet and technology – Strong financial profiles and excellent funding access help companies navigate potential business fluctuations resulting from regulations

Exhibit 23 Exhibit 24 Rating distribution Outlook distribution

Data as of 15 June 2021; eight rated companies Data as of 15 June 2021; eight rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 25 Exhibit 26 Revenue growth will remain solid, but rising competition will Retained cash flow coverage of debt will decline but remain strong weaken profit margin in 2021; leverage will be largely stable

Adjusted EBITDA margin - weighted average (left axis) Adjusted RCF/debt - weighted average (left axis) Revenue year-on-year growth - weighted average (right axis) Adjusted debt/EBITDA - weighted average (right axis) 80% 3.0x 25% 60% 70% 2.5x 50% 20% 60% 2.0x 50% 40% 15% 40% 1.5x year growth % growth year - 30% 30% on

- 1.0x Adjusted RCF/debtAdjusted

10% 20% debt/EBITDA Adjusted 20% 0.5x 10% Adjusted EBITDA EBITDA margin Adjusted

5% year Revenue 0% 10% 2018 2019 2020 2021E 2022E Alibaba's fiscal year ends on 31 March. , Baidu, JD.com, Weibo, Meituan and 0% 0% Vipshop's fiscal year ends on 31 December. 2018 2019 2020 2021E 2022E Sources: Moody’s Financial Metrics and Moody's Investors Service estimates Alibaba's fiscal year ends on 31 March. Tencent, Baidu, JD.com, Weibo, Meituan and Vipshop's fiscal year ends on 31 December. Value-added tax (VAT) is represented as net against Baidu's revenue. Sources: Moody’s Financial Metrics and Moody's Investors Service estimates

12 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Internet and technology - Strong financial profiles and excellent funding access help companies navigate business fluctuations resulting from regulations Credit trends and developments to monitor

» Revenue growth for the sector will remain solid at 15%-20% in 2021, supported by accelerated offline to online migration of consumption

» Sector average EBITDA margin will continue to decline as antitrust regulations encourage competition; this will cause companies to increase their investments in an effort to maintain their market positions

» Most rated companies have excellent liquidity and strong cash positions, which will provide a financial buffer against the negative effects of antitrust regulations

Companies of interest

» Meituan's (Baa3 negative) negative outlook reflects faster-than-expected growth in the company’s community e-commerce segment, which requires heavy early-stage investments. These investments will dampen earnings, raise leverage and generate negative free cash flow over the next 12 to 18 months.

We expect a gradual recovery following the weakening of Meituan’s credit metrics and financials by 2022. Solid cash flow from its food delivery and in-store, hotel and travel segments, and Tencent Holdings (A1 stable) as its strategic shareholder will help the recovery.

» Weibo Corporation (Baa2 stable)’s parent company Sina completed its privatization by Sina Group Holding Company Limited (controlled by Sina's chairman and CEO Charles Chao) in March 2021. We subsequently changed the outlook on Weibo’s ratings to stable, reflecting our view that the parent's debt-funded privatization will pose less drag on Weibo's credit profile. This is because a lower amount of debt was used than we previously expected. There is also less risk of Weibo's assets or cash flow being used to service or repay Sina's privatization debt.

13 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Metals and mining – Rising demand and solid commodity prices will help rated companies deleverage

Exhibit 27 Exhibit 28 Rating distribution Outlook distribution

Data as of 15 June 2021; five rated companies Data as of 15 June 2021; five rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 29 Exhibit 30 Revenue will grow steadily, supported by rising demand and solid Leverage will improve for most rated companies as earning growth commodity prices outpaces debt increases

2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E 800 8x

700 7x

600 6x

500 5x

RMB billionsRMB 400 4x -

300 3x Adjusted debt/EBITDA Adjusted Revenue 200 2x

100 1x

- Zijin Mining Yanzhou Coal Shandong China National China Minmetals Zijin Mining Yanzhou Coal Shandong China National China Minmetals Energy Gold Energy Gold Shandong Energy's financials include Yanzhou Coal, which is part of the Yankuang Group. Shandong Energy's financials include Yanzhou Coal, which is part of the Yankuang Group. The merger between Shandong Energy and Yankuang Group was completed in December The merger between Shandong Energy and Yankuang Group was completed in December 2020. 2020. Sources: Moody’s Financial Metrics and Moody's Investors Service estimates Sources: Moody’s Financial Metrics and Moody's Investors Service estimates

Credit trends and developments to monitor

» Prices of industrial metals and coal will likely weaken slightly in the second half of 2021 from the current elevated levels but remain higher than 2020 levels; the moderate price decline is caused by supply exceeding demand

» The still-solid prices and increased production volumes will boost rated companies’ earnings

» The earnings growth will outpace debt growth, thereby reducing leverage; debt will increase to fund business growth

Companies of interest

» Strong production pipeline at Zijin Mining (Ba1 stable) will drive earning growth; but rising geopolitical risks from overseas production bases and the growth-oriented acquisition strategy, partly funded by debt, will constrain the credit profile

» The merger of Yankuang Group and Shandong Energy (Ba1 stable), completed in December 2020, doubled Shandong Energy's size; but the combined company's credit quality is still constrained by factors including exposure to a single commodity - coal - and the reduced secular demand for coal in the medium to long term

14 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Oil and gas - National oil companies’ leverage will improve, backed by higher oil price

Exhibit 31 Exhibit 32 Rating distribution Outlook distribution

Data as of 15 June 2021; three rated companies Data as of 15 June 2021; three rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 33 Exhibit 34 National oil companies’ (NOCs) leverage will improve in next 12-18 NOCs’ free cash flow will increase in 2021 and 2022 as growth in months, driven by higher EBITDA operating cash flow outpaces capital spending increases

CNOOC CNPC CNOOC CNPC Sinopec 3.0x 100

2.5x 50

2.0x 0

1.5x

(50) 1.0x Adjusted debt/EBITDA Adjusted

Free flowcash (RMB billions) (100) 0.5x

(150) 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E Sources: Moody’s Financial Metrics and Moody's Investors Service estimates Our projections are based on a Brent price of $55 per barrel for 2021 and 2022. Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates

Credit trends and developments to monitor

» National oil companies’ (NOCs) EBITDA will increase in the next 12-18 months under our assumption for higher oil prices and faster GDP growth

» NOCs’ adjusted debt/EBITDA will decline in 2021 from 2020 because EBITDA growth will outpace debt growth; the ratio will continue to improve slightly in 2021 and 2022

» NOCs’ free cash flow will increase as growth in operating cash flow outstrips growth in capital spending

» Refining throughput will increase and refining margin will recover to pre COVID-19 level, supported by the recovery of domestic transportation and industrial activities

Companies of interest

» CNOOC’s (A1 stable) higher planned capital spending will lead to higher production volume and increase in reserve, which will help lower its leverage

15 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Oilfield services – Revenue and earnings will recover as oil prices increase with economic recovery

Exhibit 35 Exhibit 36 Rating distribution Outlook distribution

Data as of 15 June 2021; three rated companies Data as of 15 June 2021; three rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 37 Exhibit 38 Revenue will resume growth in 2021 and 2022 as demand increases Leverage will decline as companies pay down debt with free cash with higher oil prices and economic growth flow

Revenue (left axis) Adjusted debt (left axis) Revenue year-on-year growth - weighted average (right axis) Adjusted debt/EBITDA - weighted average (right axis) 14 60% 14 18x

12 12 15x 40% 10 10 12x 8 20% 8 9x 6 6 0% RMB billionsRMB RMB RMB billions 6x 4 4 -20% 3x 2 2

- -40% 0 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E Exhibit includes averages for the three rated Chinese oilfield services companies: Anton Exhibit includes averages for the three rated Chinese oilfield services companies: Anton Oil, Honghua and Hilong. Oil, Honghua and Hilong. Sources: Moody’s Financial Metrics and Moody's Investors Service estimates Sources: Moody’s Financial Metrics and Moody's Investors Service estimates

Credit trends and developments to monitor

» Revenue will resume growth in the next 12-18 months because higher oil prices will increase oil and gas companies' exploration and production activities, raising demand for oilfield services companies’ products and services.

» Increased natural gas and shale gas production activities in China, and oilfield services companies’ new products and service offerings will also support revenue growth

» Margin will increase with improving operational efficiencies and cost reduction measures, but price competition will remain intense

» Adjusted debt will decrease slightly because companies will reduce debt with solid free cash flow from higher earnings, prudent spending and better working capital cycle

Companies of interest

» Honghua’s (B1 stable) credit quality will improve because of the better operating environment and continued strong support and operational benefits from its SOE parent; both factors help drive a solid earnings recovery

» Anton’s (B1 negative) earnings will recover in 2021 and 2022 as it benefits from the increased natural gas and shale gas production activities in China and its gradually recovering overseas operations

16 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Property – Credit metrics will improve with solid revenue growth and controlled debt level

Exhibit 39 Exhibit 40 Rating distribution Outlook distribution

Data as of 15 June 2021; 71 rated companies Data as of 15 June 2021; 71 rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 41 Exhibit 42 Weighted average revenue/adjusted debt will improve in 2021-22 Interest coverage will strengthen in 2021 and 2022

Rated Portfolio Baa Ba B Rated Portfolio Baa Ba B 120% 7x

100% 6x

5x 80% 4x 60% 3x 40% 2x

20% 1x

0% - 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E

Data cover the 45 B- to Baa-rated Chinese property developers. Data cover the 45 B- to Baa-rated Chinese property developers. Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates

Credit trends and developments to monitor

» Developers' weighted average revenue/adjusted debt will improve to around 78% in 2021 and 82% in 2022 from 72% in 2020

- Solid contracted sales during the past one to two years will support revenue growth

- Debt growth will slow with regulatory controls and developers' efforts to scale back land acquisitions as contracted sales growth slows

» Developers’ weighted average EBIT/interest ratio will improve to 3.1x in 2021 and 3.3x in 2022 from 2.7x in 2020 as revenue growth more than offsets the impact of gross margin contraction

Companies of interest

» Evergrande’s (B1 negative) negative outlook reflects the uncertainties surrounding the company’s ability to significantly reduce its high level of short-term debt, high debt leverage and still-high proportion of trust loans in its total debt over the next 12-18 months

» Yuzhou’s (B1 negative) negative outlook reflects the uncertainties surrounding its ability to improve its revenue recognition and financial metrics over the next 12-18 months

17 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Steel, aluminum and cement – GDP growth drives price increases, supports revenue and earnings growth

Exhibit 43 Exhibit 44 Rating distribution Outlook distribution

Data as of 15 June 2021; nine rated companies Data as of 15 June 2021; nine rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 45 Exhibit 46 Revenue will increase modestly for most rated companies, driven Most rated companies' leverage will improve in 2021 as earnings by higher prices increase

2018 2019 2020 2021E 2022E 5x

4x

3x

2x Adjusted debt/EBITDA Adjusted 1x

0x Anhui Conch China West China Hongqiao Beijing New Huaxin Steel Cement Building Cement Materials

Source: Moody's Investors Service and Moody's Investors Service estimates Source: Moody's Investors Service and Moody's Investors Service estimates

18 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Steel, aluminum and cement – GDP growth drives price increases, supports revenue and earnings growth Credit trends and developments to monitor

» Higher steel and aluminum prices will support companies’ revenue growth

» Cement selling price will remain stable and high enough for companies to generate healthy operating cash flow

» Carbon transition target may raise decarbonization investments; but these investment requirements will also raise industry standards, screen out weak companies that cannot comply with government targets and benefit industry leaders in the longer term

Companies of interest

» Baowu (A3 stable) will benefit from the increase in steel price, but elevated iron ore cost will constrain margin growth in 2021 and 2022. While the company will need to increase investments to reduce carbon emissions, these investments will help the company obtain policy support, such as tax benefits and lower-cost financing, which will further strengthen Baowu's competitive position

» We expect Hongqiao (Ba3 stable) to strengthen its capital structure by reducing debt in 2021

» West China Cement Limited (Ba2 positive) has sustained positive free cash flow, reflecting its solid business model and prudent financial management. We expect West China Cement will continue to grow its operating scale and product diversity by investing in aggregate, readily mixed concrete and other building material products. Meanwhile, the company's liquidity and financial leverage will remain strong for its rating Ba2 rating in the next two years.

19 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Technology hardware – Demand improvement supports revenue and profitability

Exhibit 47 Exhibit 48 Rating distribution Outlook distribution

Data as of 15 June 2021; six rated companies Data as of 15 June 2021; six rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 49 Exhibit 50 Increased demand will lift revenue and EBITDA for most rated Leverage will improve for most rated companies, driven by rising companies EBITDA

Total revenue (left axis) 2.0x Total adjusted EBITDA (left axis) 1.8x Revenue year-on-year growth - weighted average (right axis) Adj. EBITDA margin - weighted average (right axis) 1.6x

1,400 30% 1.4x

1,200 1.2x

1.0x 1,000 20% 0.8x 800

RMB RMB billions 0.6x

600 debt/EBITDA adjusted Average 0.4x

10% 0.2x 400

200 2018 2019 2020 2021E 2022E Exhibit shows average leverage of AAC Technologies, Hangzhou , Lenovo, Midea, - 0% 2018 2019 2020 2021E 2022E Sunny Optical and Xiaomi. Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates Exhibit shows aggregate revenue and average margins for AAC Technologies, Hangzhou Hikvision, Lenovo, Midea, Sunny Optical and Xiaomi. Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates

20 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Technology hardware – Demand improvement supports revenue and profitability Credit trends and developments to monitor

» EBITDA will increase with rising revenue

» Higher demand amid global economic recovery will increase pricing power and drive EBITDA growth

» Leverage will improve for rated companies as EBITDA grows and debt holds steady

» Geographic footprint of supply chains will continue to evolve amid US-China trade tensions and result in more investments offshore

Companies of interest

» Lenovo’s (Baa3 positive) EBITDA growth, driven by sales volume growth and steady margin, and debt reduction, will lower leverage. The positive outlook reflects our expectation that Lenovo will maintain its leading market position and improved EBITDA generation over the next 12-18 months, supported by favorable global demand prospects for personal computers. In addition, we expect the company's continued disciplined financial management will help it to maintain its improved debt leverage and its excellent liquidity.

» Xiaomi’s (Baa2 stable) rating reflects the company’s fast-growing consumer brand and globally competitive scale; internet services that provide recurring revenue and builds customer loyalty; and prudent financial policy as demonstrated by low leverage and a solid net cash position, which acts as buffers against fluctuations in product demands. However, the rating factors in the company's moderate profitability and the fluctuating demand for its key smartphone products.

» Sunny Optical’s (Baa1 stable) rating upgrade to Baa1 reflects the company’s improving credit diversification which, in our view, sufficiently mitigates structural subordination risk. The rating was previously one notch lower than it would otherwise be because of Sunny Optical's holding company status and structural subordination to claims at the operating company level. The company has been improving its geographic diversification in terms of production footprint through investing in production facilities in India (Baa3 negative) and Vietnam (Ba3 positive) since 2019. We expect the operating scale and asset base of the company's overseas operations to rise as its customers undertake more production outside of China.

» AAC Technologies’ (Baa2 stable) downgrade reflects our expectation that the company’s profitability will be lower and leverage will be higher than our previous expectation, stemming from competitive pressure as well as investment needs associated with its diversification into optical components. The stable outlook reflects AAC Technologies' long operating history and prudent financial management, with a track record of maintaining a solid capital structure and strong liquidity, that will help it navigate its business diversification, product upgrades and industry cycles.

21 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Transportation – Credit quality will improve with economic recovery but be partly offset by high policy-led infrastructure spending

Exhibit 51 Exhibit 52 Rating distribution Outlook distribution

Data as of 15 June 2021; 10 rated companies Data as of 15 June 2021; 10 rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 53 Exhibit 54 Rated toll road companies’ leverage will remain high given sizable Rated ports’ credit metrics will remain largely stable over the next capital spending 12-18 months Improving throughput volume is offset by significant capital spending

CAPEX (left-axis) FFO/Debt (right-axis) CMPH's FFO/Debt SIPG's FFO/Debt 140 9.0% Zhejiang Port's FFO/Debt HPHT's FFO/Debt 30%

120 8.5% 25% 8.0% 100

7.5% 20% 80 7.0% 15% 60 RMB billionRMB 6.5% 10% 40 6.0%

5% 20 5.5%

0 5.0% 0% 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E Exhibit includes five rated toll road companies, of which Shandong Hi-Speed’s metrics CMPH refers to China Merchants Port Holdings Company Ltd; its credit metrics include pro have excluded its banking segment. Rated toll road companies under Local Government rata consolidation of joint ventures and associates. SIPG refers to Shanghai International Financing Vehicles in China Methodology are excluded from this analysis. Port (Group) Co. Ltd. Zhejiang Port refers to Zhejiang Provincial Seaport Investment & Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates Operation Group. HPHT refers to Hutchison Ports Holding Trust. HPHT’s projected credit metrics do not factor in future investments in Yantian East Port phase 1. Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates

22 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Transportation - Credit quality will improve with economic recovery but be partly offset by high policy-led infrastructure spending Credit trends and developments to monitor

» Toll road companies’ revenue will recover in 2021 from the 2020 trough, driven by recovery in traffic volumes underpinned by strong business activity after the coronavirus pandemic and termination of the temporary toll-free policy in H1 2020

» The government’s transportation development plan for 2021 to 2035 suggests that infrastructure spending plans will remain sizable, driven by China’s ongoing urbanization and the government’s stimulus to spur economic growth

» Recurring fiscal support in the form of grants and subsidies supports the credit profile of issuers, and will partly mitigate leverage increase for publicly managed toll road operators

» Challenges arising from the recent policy announcement regarding toll fare reduction, plus delays in revising toll road laws

» Port throughput volume likely to grow at a mid-single-digit percentage in 2021 from flattish growth in 2020, driven by export demand for daily necessities and consumption goods produced in China; but capital spending will remain high

Companies of interest

» The expected revenue recovery in 2021 will benefit rated toll road companies with quality asset portfolios, such as Shenzhen Expressway (Baa2 stable); however, the improvement in credit metrics will be hindered by their capital spending and potential acquisitions

» Credit metrics will improve in 2021 for rated port operators in China, such as Shanghai International Port (Group) (A1 stable) and Hutchison Ports Holding Trust (Baa1 stable), from 2020 levels

23 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Utilities – Credit quality supported by rising energy demand, but offset by higher fuel costs and capital spending

Exhibit 55 Exhibit 56 Rating distribution Outlook distribution

Data as of 15 June 2021; 29 rated companies Data as of 15 June 2021; 29 rated companies Source: Moody's Investors Service Source: Moody's Investors Service

Exhibit 57 Exhibit 58 Rated power utilities’ credit metrics will remain largely stable over Power demand will rebound, driven by economic recovery the next 12-18 months Strong power demand is offset by rising coal prices and significant capital spending

RMB billion Capex (LHS) FFO/debt (RHS) GDP Growth % Historical power demand growth % 1,200 18.0% Projected growth % (low end) Projected growth % (high end) 9%

1,000 17.5% 8%

7% 800 17.0% 6%

5% 600 16.5% 4%

400 16.0% 3%

2% 200 15.5% 1%

0% 0 15.0% 2018 2019 2020 2021E 2022E 2018 2019 2020 2021E 2022E Sources: WIND, National Energy Administration and Moody’s Investors Service estimates Exhibit includes only Moody’s-rated power utilities issuers. Sources: Moody’s Financial Metrics and Moody’s Investors Service estimates

24 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Utilities – Credit quality supported by rising energy demand, but offset by higher fuel costs and significant capital spending Credit trends and developments to monitor

» Energy demand will be strongly supported by China’s economic recovery, benefiting rated utilities in power and gas distribution sectors

» Coal power generators will benefit from the strong power demand in 2021: mid- to high-single-digit percentage growth; but this benefit will be partly offset by margin contraction driven by higher coal prices and more market-based electricity sales

» Renewable capacity expansion will accelerate in the 14th Five-Year Plan under the government’s emission reduction targets, putting pressure on power generators’ credit metrics

» Grid companies’ credit metrics will improve in 2021 after temporary tariff cut in 2020; but the improvement will be partly offset sizable capital spending

Companies of interest

» Volume sales will strengthen, but margins will likely contract for thermal power generation companies such as China Huaneng Group Co., Ltd (A2 stable), China Huadian Corporation LTD. (A2 stable) and State Power Investment Corporation (A2 stable) because of higher coal prices and more market-based electricity sales, which generally have lower margins than sales under regulated tariffs

» State Grid Corporation of China’s (A1 stable) credit profile will remain strong despite lower tariff during the second regulatory period and sizable capital spending plan

25 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Moody’s related publications Sector research

» Nonfinancial Companies – Asia Pacific: Issuance of hybrid securities is rising as companies seek to rein in leverage, 16 June 2021

» Oil Services – China: Strong oil & gas demand will underpin credit quality of oilfield services providers, 10 June 2021

» Government Policy – US: Legislation to counter China would reshape operating environment for many sectors, 9 June 2021

» China Credit Conditions (June 2021) (Slides), 7 June 2021

» Metals & Mining – China: Metal miners' integrated business model drives thinner margins versus global peers, 7 June 2021

» Asian Liquidity Stress Indicator (ALSI), June, 2021, 7 Jun 2021

» Property – China: China Property Focus: Rated developers' profit margins will contract in 2021-22, 28 May 2021

» Environmental Risks – China: Path to net-zero emissions points to bumpy transition for fossil fuel-driven sectors, 27 May 2021

» Surface Transportation and Logistics – China: Green packaging raises costs but scale, strong financials preserve credit quality, 25 May 2021

» Credit Conditions – China: Government balances systemic risk, moral hazard for distressed state-owned entities, 24 May 2021

» Global Emerging Markets Chartbook - May 2021 (Slides), 24 May 2021

» Nonfinancial companies – China: China Bond Monitor: SOE credit differentiation will intensify, 20 May 2021

» Trade - US and China: US importers and consumers bear the brunt of US-China tariffs, 17 May 2021

» China property: Credit outlook and regulatory updates (Slides), 14 May 2021

» Credit Conditions – China: Tightened corporate bond issuance policies limit weak companies' access to market, 13 May 2021

» Steel-makers – China: Updated production capacity swap policy is credit positive, 10 May 2021

» Nonfinancial companies – Asia (ex Japan and Australia): Cash pile hits record-high $1.44 trillion with debt proceeds and increased cash flow, 29 April 2021

» Q1 2021 APAC Default Study - First Quarter 2021 (Slides), 29 April 2021

» Property — China: Developers' leverage will improve further through 2022, but margin will contract, 28 April 2021

» State-Owned Enterprises (SOEs) – China: First-quarter financials indicate uneven recovery across sectors and regions, 28 April 2021

» Asia High-Yield Interest Chartbook - First quarter 2021 (Slides), 26 April 2021

» After-School Tutorial Providers – China: Enforcement of regulatory rules will have limited impact on market leaders, 22 April 2021

» Property – China: Stable outlook reflects solid sales growth, inventory levels, continued funding access, 21 April 2021

Topic page

» China Growth & Credit

» ESG Credit

To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All research may not be available to all clients.

26 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Rated Chinese nonfinancial companies included in this report (as of 15 June 2021)

Exhibit 59 Issuer Rating of Issuer Outlook Auto and auto services AVIC Automotive Systems Holding Co., Ltd. A3 STA Beijing Automotive Group Co., Ltd. Baa3 STA CAR Inc. B3 STA China Grand Automotive Services Grp Co., Ltd B1 NEG Dongfeng Motor Group Company Limited A2 STA Geely Automobile Holdings Limited Baa3 STA Zhongsheng Group Holdings Limited Baa3 STA Chemicals China National Bluestar (Group) Co., Ltd. Baa2 STA China National Chemical Corporation Limited Baa2 STA Shanghai Huayi (Group) Company Baa3 STA Sinochem International Corporation Baa1 STA Tianqi Lithium Corporation Caa2 NEG Wanhua Chemical Group Co., Ltd. Baa2 STA Yingde Gases Group Company Limited Ba2 STA Construction and engineering China Communications Construction Co., Ltd. Baa1 STA China Energy Engineering Corporation Limited Baa1 STA China Metallurgical Group Corporation Baa1 STA China Railway Construction Corp Ltd A3 STA China Railway Group Limited A3 STA China State Construction Engineering Corp Ltd A2 STA China State Construction Int'l Holdings Ltd Baa2 STA Jiangsu Nantong Sanjian Const. Grp. Co., Ltd. Caa1 NEG Metallurgical Corporation of China Ltd. Baa1 STA Power Construction Corporation of China Baa1 STA Shanghai Construction Group Co., Ltd. Baa2 STA SINOPEC Engineering (Group) Co., Ltd. A2 STA Food and beverage Bright Food International Ltd. Baa3 STA China Mengniu Dairy Company Limited Baa1 STA Health and Happiness (H&H) Int'l. Hldgs. Ltd. Ba2 STA Inner Mongolia Yili Industrial Group Co Ltd A3 STA Tingyi (Cayman Islands) Holding Corp. A3 STA Want Want China Holdings Limited A3 STA WH Group Limited Baa2 STA Internet and technology Alibaba Group Holding Limited A1 STA Baidu Inc. A3 STA JD.com, Inc. Baa1 STA Meituan Baa3 NEG Semiconductor Manufacturing Int'l Corp. Baa3 STA Tencent Holdings Limited A1 STA Vipshop Holdings Limited Baa1 STA Weibo Corporation Baa2 STA Metals and mining China Minmetals Corporation Baa1 STA China National Gold Group Co., Ltd. Baa3 STA Shandong Energy Group Company Limited Ba1 STA Yanzhou Coal Mining Company Limited Ba1 STA Zijin Mining Group Company Limited Ba1 STA

27 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Issuer Rating of Issuer Outlook Oil and gas China National Offshore Oil Corporation A1 STA China National Corporation A1 STA China Petrochemical Corporation A1 STA Oilfield services Anton Oilfield Services Group B1 NEG Hilong Holding Limited Caa1 STA Honghua Group Limited B1 STA Property Agile Group Holdings Limited Ba2 STA Beijing Capital Land Limited Ba3 STA Central China Real Estate Limited Ba3 STA China Aoyuan Group Limited B1 STA China B1 NEG China Jinmao Holdings Group Limited Baa3 STA China Overseas Grand Oceans Group Limited Baa2 STA China Overseas Land & Investment Limited Baa1 STA China Resources Land Limited Baa1 STA China SCE Group Holdings Limited B1 POS China South City Holdings Limited B2 STA China Co., Ltd. Baa1 STA CIFI Holdings (Group) Co. Ltd. Ba2 STA Holdings Company Limited Baa3 STA DaFa Properties Group Limited B2 STA Datang Group Holdings Ltd. B2 STA Dexin China Holdings Company Limited B2 STA Famous Commercial Limited Ba3 STA Fantasia Holdings Group Co., Limited B2 STA Gemdale Corporation Ba2 STA Golden Wheel Tiandi Holdings Company Limited B3 NEG Greenland Holding Group Company Limited Ba1 STA Greenland Holdings Limited Ba2 STA Greentown China Holdings Limited Ba3 STA Guangzhou Fineland Real Estate Development B2 STA Guangzhou R&F Properties Co., Ltd. B1 NEG Helenbergh China Holdings Limited B2 STA Hengda Real Estate Group Company Limited B1 NEG Hengli (Hong Kong) Real Estate Limited Baa3 STA Hopson Development Holdings Limited B2 STA Huayuan Property Co., Ltd. B1 STA International Financial Center Property Ltd. B1 STA Jiangsu Zhongnan Construction Grp Co., Ltd. B1 STA Jiayuan International Group Limited B2 POS Jingrui Holdings Limited B2 STA Jinke Property Group Co., Ltd. B1 POS Kaisa Group Holdings Ltd B1 STA KWG Group Holdings Limited B1 STA Landsea Green Properties Co., Ltd. B2 STA Leading Holdings Group Ltd B2 STA Logan Group Company Limited Ba2 STA Longfor Group Holdings Limited Baa2 STA Modern Land (China) Co., Limited B2 STA

28 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Issuer Rating of Issuer Outlook Poly Developments and Holdings Group Co Ltd Baa2 STA Powerlong Real Estate Holdings Limited B1 POS R&F Properties (HK) Company Limited B2 NEG Radiance Holdings (Group) Co. Ltd. B1 STA Redsun Properties Group Limited B2 POS RiseSun Real Estate Development Co., Ltd. Ba3 STA Road King Infrastructure Limited Ba3 STA Rongan Property Co., Ltd. B2 STA Ronshine China Holdings Limited B1 STA Seazen Group Limited Ba1 STA Seazen Holdings Co., Ltd. Ba1 STA Shimao Group Holdings Limited Ba1 POS Shinsun Holdings (Group) Co., Ltd. B2 STA Sichuan Languang Development Co., Ltd. B3 NEG Sinic Holdings (Group) Company Limited B2 STA Sino-Ocean Group Holding Limited Baa3 STA Sunac China Holdings Limited Ba3 POS Sunriver Holding Group Company Limited B2 STA Tianji Holding Limited B2 NEG Times China Holdings Limited Ba3 STA Yango Group Co., Ltd B1 STA Yanlord Land Group Limited Ba2 STA Yincheng International Holding Co., Ltd. B2 STA Yuexiu Property Company Limited Baa3 STA Yuzhou Group Holdings Company Limited B1 NEG Zensun Group Limited B2 STA Zhenro Properties Group Limited B1 STA Zhongliang Holdings Group Company Limited B1 POS Steel, aluminum and cement Anhui Conch Cement Company Limited A2 STA Baoshan Iron & Steel Co., Ltd. A3 STA Baosteel Resources International Company Ltd. Baa1 STA Beijing New Building Materials Public Ltd Co A3 STA China Baowu Steel Group Corporation Limited A3 STA China Hongqiao Group Limited Ba3 STA Huaxin Cement Co., Ltd. Baa1 STA Pujiang International Group Limited B2 STA West China Cement Limited Ba2 POS Technology hardware AAC Technologies Holdings Inc. Baa2 STA Hangzhou Hikvision Digital Tech. Co., Ltd. A3 STA Lenovo Group Limited Baa3 POS Co., Ltd. A3 STA Sunny Optical Technology (Group) Co. Ltd. Baa1 STA Xiaomi Corporation Baa2 STA

29 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

Issuer Rating of Issuer Outlook Transportation Anhui Transportation Holding Group Co., Ltd. Baa1 STA China Merchants Port Holdings Company Limited Baa1 STA Guangzhou Communications Investment Group Baa2 STA Hutchison Port Holdings Trust Baa1 STA Shandong Hi-speed Group Co., Ltd A3 STA Shanghai International Port (Group) Co., Ltd A1 STA Shenzhen Expressway Company Limited Baa2 STA Shenzhen International Holdings Limited Baa2 STA Yuexiu Transport Infrastructure Limited Baa2 STA Zhejiang Provincial Seaport Invt & Op Grp A1 STA Utilities Beijing Energy Holding Co., Ltd. A3 STA Beijing Enterprises Group (BVI) Company Ltd Baa1 STA Beijing Enterprises Holdings Limited Baa1 STA Beijing Gas Group Company Limited A3 STA Binhai Investment Company Limited Ba1 STA China General Nuclear Power Corporation A2 STA China Huadian Corporation LTD. A2 STA China Huaneng Group Co., Ltd. A2 STA China Longyuan Power Group Corporation Ltd. A3 STA China Oil and Gas Group Limited Ba2 STA China Resources Gas Group Limited A3 STA China Resources Power Holdings Co., Ltd Baa2 STA China Southern Power Grid Co., Ltd. A1 STA China Three Gorges Corporation A1 STA China Water Affairs Group Limited Ba1 STA ENN Energy Holdings Limited Baa2 STA ENN Natural Gas Co., Ltd. Ba1 STA Hengjian Investment Holding Co Ltd A2 STA Huaneng Power International, Inc. A2 STA Company Limited A2 STA Shenergy (Group) Co., Ltd. A1 STA Sichuan Provincial Investment Group Co., Ltd. Baa1 STA State Grid Corporation of China A1 STA State Grid International Development Limited A1 STA State Power Investment Corporation Limited A2 STA Company Limited Baa1 STA Xinjiang Goldwind Science & Technology Co Ltd Ba1 STA Zhejiang Provincial Energy Group Co. Ltd A2 STA Zhongyu Gas Holdings Limited Ba3 STA

Source: Moody's Investors Service

30 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment MOODY'S INVESTORS SERVICE CORPORATES

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REPORT NUMBER 1263061

31 24 June 2021 Nonfinancial Companies – China: Credit Trend Monitor: Earnings rising with GDP; leverage trends driven by investment