223 view s

S&P downgrades Hong Kong and China Gas to “A-“ over weaker financials

Despite this, the firm maintained its “stable” outlook.

S&P Global Ratings downgraded Hong Kong and China Gas Co. Ltd. (HKCG) to “A-“ as it expects its ratio of funds from operation to remain below 30% between 2021-2023.

“We lowered the rating because we expect HKCG's ratio of FFO to debt in the next 12-24 months will remain below 30%, the threshold for an 'A' rating,” the S&P explained.

The credit rating agency also noted that the company will continue to be weighed down by its debt-funded capital expenditure.

In line with this, S&P forecast that HKCG’s annual capital expenditure will increase to $7.6b-8.5b from 2021 to 2023 to cover its 5-year development plan in smart energy and solar projects.

On top of this, it expects that the projects will need some RMB50b (approximately HKD$60.5b) in investments until 2025; whilst dividend payments will likely deplete $7b-7.5b of cash per year in the next two to three years.

“As a result, we expect the net debt for HKCG will rise to $41b-45b over 2021-2023, from $38b in 2020.”

S&P noted HKCG could mitigate this through moderate increases in earnings from its gas businesses in Hong Kong and China.

Despite the downgrade, S&P maintained its stable rating outlook as it sees HKCG will benefit from its “strong and stable” gas business in Hong Kong as well its expected recovery in profit in mainland China amongst others.

Follow the link for more news on

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

3 Hongkongers land on Forbes Asia's Power Businesswomen 2024
The youngest is Stephanie Lo, vice chairman of Shui On Land.Three Hongkongers were included in Forbes Asia’s Power Businesswomen 2024 for being the first women to step into their roles in their companies.The youngest of the three is Stephanie Lo, vice chairman of Shui On Land. Lo assumed the role in May, overseeing the China-focused property development arm of the Shui On Group, founded by her father, Vincent Lo.Also on the list is Clara Chan, CEO of Hong Kong Investment Corporation (HKIC). Prior to HKIC, Chan was a manager of direct investments at the Hong Kong Monetary Authority in 2010 where she handled the $39b bailout of Cathay Pacific during the pandemic.The third Hongkonger is Bonnie Chan, CEO of Hong Kong Exchanges and Clearing, who has overseen a notable increase in listings this year. In the second quarter, 18 companies went public compared to 12 in the first, raising 79% more funds.
Media & Marketing

Exclusives

Stellerus helps organisations manage hazard, climate risks
The Hong Kong startup offers a fast and accurate early warning system for natural disasters.
K11 MUSEA bridges art, culture, and retail
Visitors find top-tier brands and museum-grade art pieces at the cultural-retail landmark.