Xinhua Far East Assigns AA Issuer Credit Rating to Shanghai Municipal Raw Water Co Ltd

Xinhua Far East Assigns AA Issuer Credit Rating to Shanghai Municipal Raw Water Co Ltd

March 06, 2006

    HONG KONG, March 6 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings today assigned Shanghai Municipal Raw
Water Co Ltd ("Shanghai Raw Water" or "the
Company", SH A 600649) with an AA domestic currency
issuer credit rating. The Company's rating outlook is
stable.  The rating reflects Shanghai Raw Water's
monopolistic position in water supply and wastewater
treatment markets in Shanghai based on its dominance of
natural resources and the support from municipal
government.  The shortage of water supply in Shanghai and
the construction of Phase III of the Yangtze River Water
Diversion Project will provide a healthy base for the
Company's long-term growth.  Shanghai Raw Water's stable
cash flow and its low debt burden are also important
considerations in its AA rating.  On the other hand, Xinhua
Far East acknowledges the pressure on the Company's water
processing costs and gross margin due to environmental
impacts, but believes its operating efficiencies and stable
investment incomes will continue counteracting these
challenges.

    The Company's major business lines - water supply and
wastewater treatment -- are non-cyclical activities with
very low exposure to economic fluctuations. Shanghai Raw
Water enjoys an unparalleled position in both of these
markets in Shanghai, providing the city with 95% of its
fresh water supply and effectively dominating the
wastewater treatment market.  The shortage of water supply
and growth in demand in Shanghai provide ample
opportunities for the Company's long-term growth.  Also
playing a role in its future profit earnings ability is the
implementation of Phase III of the Yangtze River Water
Diversion Project, which is set to enlarge the Company's
water supply capacity by 13%.

    Xinhua Far East acknowledges the Company's sound
financial profile and conservative debt policy in recent
years.  Stable cash flow and negligible leverage ratios
allow the Company to have superior financial flexibility
among its domestic peers.  Although the Water Diversion
Project will incur large capital expenditures in the
short-term, Xinhua Far East does not expect it to exert
much pressure on the Company's financial leverage.

    Shanghai Raw Water is Shanghai's largest raw water
supplier and largest wastewater treatment provider.  In
2004, it supplied 1.72 billion cubic meters of raw water
and treated 584 million cubic meters of wastewater,
accounting for 74.3% and 24.5% of its total revenue
respectively.  Shanghai Chengtou Corporation, a subsidiary
wholly-owned by the state-owned Asset Administration
Commission of the Shanghai Municipal Government, is the
largest shareholder with a 54.42% stake in the Company.

    Shanghai Municipal Raw Water Co Ltd is also a large cap
company in the Xinhua/FTSE China A50 Index.  As of March 3,
2006, its total market cap equaled RMB 11.2 billion with
investable market cap of RMB 3.4 billion.

    For the rating report summary, please visit
http://www.xinhuafinance.com/creditrating .

    Note to Editors:

    About FTSE/Xinhua China A50 Index 

    The FTSE/Xinhua China A50 Index is a real-time tradable
index comprising the largest 50 A Share companies by full
market capitalization.  Designed to meet the needs of
QFIIs, it can be used as a basis for both on-exchange and
OTC derivative products, mutual funds and ETFs.  For daily
data and further information, see http://www.xinhuaftse.com
.

    About Xinhua Far East China Ratings

    Xinhua Far East China Ratings (Xinhua Far East) is a
pioneering venture in China that aims to rank credit risks
among corporations in China.  It is a strategic alliance
between Xinhua Finance (TSE Mothers: 9399), and Shanghai
Far East Credit Rating Co., Ltd.  Shanghai Far East became
a Xinhua Finance partner company in 2003 and the first
China member of The Association of Credit Rating Agencies
in Asia in December 2003. 

    Capitalizing on the synergy between Xinhua Finance and
Shanghai Far East, Xinhua Far East's rating methodology and
process blend unique local market knowledge with
international rating standards.  Xinhua Far East is
committed to provide investors with independent, objective,
timely and forward-looking credit opinions on Chinese
companies.  It aims to help investors differentiate the
credit risks among the corporations in China, thereby,
cultivating their awareness and promoting information
disclosures and transparency in China market.  For more
information, see http://www.xfn.com/creditrating .

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's unchallenged leader
in financial information and media,  and is listed on the
Mothers board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY).  Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and
complementary service lines: Indices, Ratings, Financial
News and Investor Relations.  Founded in November 1999, the
Company is headquartered in Shanghai with 21 news bureaus
and offices in 18 locations across Asia, Australia, North
America and Europe.  For more information, please visit
http://www.xinhuafinance.com . 
 
    About Shanghai Far East Credit Rating Co., Ltd

    Shanghai Far East Credit Rating Co., Ltd. is the first
and leading professional credit rating company with
comprehensive business coverage in China. It is an
independent agency established by the Shanghai Academy of
Social Sciences with the mission to develop internationally
accepted standards for capital market in China.  The company
is a pioneer in conducting bond-rating business in China. 
For years, it has been authorized by the Shanghai branch of
the PBOC to undertake loan certificate credit rating.

    Since establishment, it has rated over 1,000 corporate
long-term bonds and commercial papers, based on the
principles of objectivity, fairness and independence.  The
company has also maintained over 50% market share in the
loan certificate-rating sector in Shanghai for three
consecutive years.  With its strong local presence and
knowledge, it provides investors with unique and the most
insightful credit opinion.  For more information, see
http://www.fareast-cr.com .

    For more information, please contact: 

    Hong Kong
     Joy Tsang, 
     Corporate & Investor Communications Director, 
     Xinhua Finance
     Tel:   [phone] or
[phone]
     Email: [e-mail]

    US
     David Leeney, 
     Taylor Rafferty (IR/PR Contact in US)
     Tel:   [phone]
     Email: [e-mail]

SOURCE  Xinhua Far East China Ratings