S&P Maintains Longfor's Rating with a Stable Outlook

On March 31, the international credit rating agency S&P released its latest rating report on Longfor Group (00960.HK), confirming that the company’s rating is BB-, with a “stable” outlook.

“A stable rating outlook reflects our view that the company’s liquidity will remain adequate over the next 12 months.” S&P said that, benefiting from business diversification, Longfor Group’s non-property-development businesses generate stable cash flows, mitigating risks in the current downturn cycle, and supporting Longfor’s liquidity. In addition, prudent financial management will continue to underpin the company’s debt-servicing capacity.

By the end of 2025, Longfor Group’s interest-bearing liabilities were RMB 152.81 billion, down RMB 23.51 billion from the end of 2024, representing a 13% decrease. With incremental property loans tied to operations and positive operating cash flow, Longfor has safely and smoothly passed the debt peak period. In 2025, the company repaid a total of RMB 22 billion of debt, including onshore credit bonds, C-Bond enhancement-guaranteed bonds, and offshore credit loans, throughout the year. In 2026 and thereafter, the size of onshore bonds maturing each year and offshore debt is limited. Specifically, the remaining amount due in 2026 is approximately RMB 6.1 billion, and the amount due in 2027 is approximately RMB 6.2 billion.

At present, operating cash flow after capital expenditure has been positive for three consecutive years, with net inflow of RMB 5.8 billion in 2025. According to S&P’s forecast, Longfor will generate operating cash inflows of about RMB 6 billion per year in 2026 and 2027. Coupled with incremental property loans tied to operations by Longfor Group, S&P believes that Longfor’s debt-servicing and refinancing risks over the next 12 months are controllable.

In its latest research report, CITIC Securities said that Longfor’s debt structure has already improved noticeably. The company’s strategy of prioritizing the enhancement of its operations and services capabilities and driving profit improvement is also correct. The company is building a new development model anchored in operations and services—reducing the proportion of development business and increasing the proportion of operations and services business. The company’s asset base is no longer value-variable residential properties, but rather operating real estate and service-type assets with stable, predictable cash flows. After achieving RMB 7.9 billion in profit from core equity attributable to operations and services in 2025, the company further expanded its footprint of properties held, laying the groundwork for further reducing reliance on the development business.