2007'02.01.Thu
Xinhua Far East Downgrades Shenyang Jinbei Automotive Co Ltd from BB to C Issuer Rating

March 23, 2006

HONG KONG, March 23 /Xinhua-PRNewswire/ -- Xinhua Far East China Ratings today downgraded Shenyang Jinbei Automotive Co Ltd ("Jinbei Auto" or "the Company", SH A 600609) from a BB to a C domestic currency issuer credit rating. The downgrade was prompted by the large amount of overdue loans reported in the Company's 2004 annual and 2005 interim results. Overdue loans were reported to be RMB684 million in 2004, representing 33.2% of gross debt. Overdue loans rose further to RMB696 million and reached 35.7% of gross debt in 1H05, with most of the overdue loans from 2004 remaining unpaid. Xinhua Far East believes that Jinbei Auto's repayment capacity has been materially impaired, considering that its cash reserve (unpledged portion) is lower than its total overdue loans. Xinhua Far East also notes the deteriorating profit margins of both Jinbei Auto and its major subsidiaries, especially Brilliance Jinbei, which makes it very difficult for the Company to enhance its credit profile. The risks in its contingent liabilities further aggravate the problem. As competition has intensified in China's auto market, Jinbei Auto's profitability has continued to decline in recent years, in contrast to its rising light-vehicle sales. Six of its major consolidated subsidiaries - one of which has been shut down - reported losses (or slender profits) over the past three years. To make matters worse, Brilliance Jinbei, a JV between Jinbei Auto and Brilliance China Automotive Holdings Ltd ("CBA"), formerly the Company's cash cow, also reported weak performance in 2004 and 1H2005. Xinhua Far East expects that CBA, as a self-branding domestic manufacturer, might become further cornered in China's sedan market and face considerable liquidity risks should its convertible bond holders execute redemption options on the bond. There is little chance for Jinbei Auto to notably boost its profitability and cash flow in the next couple of years. In its 2005 half year report, the Company reported RMB361 million in contingent liabilities, which originated from loan assurances to its subsidiaries and unrelated companies. Based on the poor performances of most of Jinbei Auto's subsidiaries and the comparatively stagnant economy in the regions in which related companies operate, Xinhua Far East anticipates that these contingencies will lead to significant risk. A major light-vehicle producer in China, Jinbei Auto sold 18,300 light lorries in 2004, giving it a 2.4% market share; it also sold 62,100 light cars, giving it 15.8% market share. Through its JV with CBA, Jinbei Auto also produces the Zhonghua sedan, sales of which came to 10,000 units in 2005, down 8.93% YoY. The JV reported RMB432 million and RMB287 million in losses in 2004 and 1H05 respectively. For the rating report summary, please visit http://www.xinhuafinance.com/creditrating . 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: +852-3196-3983, +86-21-6113-5999 or +852-9486-4364 Email: joy.tsang@xinhuafinance.com US David Leeney Taylor Rafferty (IR/PR Contact in US) Tel: +1-212-889-4350 Email: david.Leeney@taylor-rafferty.com SOURCE Xinhua Far East China Ratings
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