Xinhua Far East Downgrades the Issuer Credit Rating of COSCO Development Co Ltd to BBB; the Rating Outlook Remains Stable

Xinhua Far East Downgrades the Issuer Credit Rating of COSCO Development Co Ltd to BBB; the Rating Outlook Remains Stable

June 26, 2006

    HONG KONG, June 26 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings (`Xinhua Far East") today
downgraded the issuer credit rating of COSCO Development Co
Ltd ("CDC" or "the Company", SH A
600641) from BBB+ to BBB; however, the company's rating
outlook remains stable. This concludes a rating review
initiated in October 2005.The downgrade was prompted by the
completion of an acquisition of a 55% equity interest in
Shanghai COSCO Sanlin Property Group Co Ltd ("COSCO
Sanlin"), the parent company of CDC, by Success Medal
International Ltd Co ("SMIL"). The acquisition
has given SMIL a 56.16% stake in CDC, via its wholly
controlled subsidiary, COSCO Sanlin. CDC's original
controlling shareholders, COSCO Group and Shanghai COSCO
Property Investment Co Ltd, no longer hold equity interests
in the company.

    Xinhua Far East realizes CDC will no longer receive
implicit and explicit support from the COSCO Group in
respect to land acquisition and in overcoming regional and
institutional barriers as a result of this transaction. In
Xinhua Far East's view, support from a huge state-owned
conglomerate such as the COSCO Group is not only unique but
critical to its property development business in China and
can hardly be provided by foreign investors. Xinhua Far
East is also concerned about the challenges SMIL faces in
setting up a new management team and reorganizing the
business structure. Meanwhile, Xinhua Far East recognizes
the impacts of more stringent government policies recently
introduced for the real estate sector and the needs for the
Company to increase its land reserves.

    Although SMIL has considerable real estate development
experience and project resources in China and East Asia,
the benefits it brings to CDC do not compare to those
afforded by a huge state-owned real estate conglomerate.
There are also uncertainties surrounding the proposed
business reorganization and integration, as well as SMIL's
intention to support the company and inject project
resources.

    CDC has already disposed of its equity interests in the
Hainan Boao project to the COSCO Group to focus on real
estate development in Shanghai. Yet without further
acquisitions of new project resources, CDC's growth
potential may fall over time. At present, CDC has two key
projects under construction: Phase III of the Shanghai
Liangwan project; and the Shanghai Laoximen project. Phase
III of Shanghai Liangwan is nearly completed, while
Shanghai Laoximen is in the process of relocating original
residents. 

    However, CDC's cash position and its financial leverage
nevertheless improved in 2005 and in the first quarter of
2006 after the disposal of the Hainan Boao project -
improvements which will enable it to accelerate the
development of current projects and consequently improve
its financial performance.

    Xinhua Far East believes that the integration process,
support from SMIL, the acquisition of new project
resources, and the company's management abilities will be
the key rating factors going forward.

    COSCO Development Co Ltd is principally engaged in real
estate development in Shanghai and has built a respectable
brand image as a result of the Liangwan project. In 2005,
it reported turnover and EBIT of RMB244 million and RMB3
million.

    COSCO Group, a Chinese state-owned conglomerate, is a
diversified services company with one of the most
recognized and admired brand names in the global shipping
and modern logistics businesses. The group also acts as an
independent shipping agency and provides services in
freight forwarding, ship building, ship repairing, terminal
operations, container manufacturing, trade, financing, real
estate, IT and contract employment. 

    SMIL was established in the British Virgin Islands by
Mr. Anthoni Salim and his father Mr. Liem Sioe Liong, both
of whom are the main shareholders of the Sanlin Group
(Indonesia). The Sanlin Group (Indonesia) is one of the
biggest diversified conglomerates in Indonesia, with
businesses in South East Asia, Hong Kong, the US and
Australia. SMIL holds a 56.16% stake in CDC, via its wholly
controlled subsidiary, COSCO Sanlin. SMIL plans to increase
its investments in the Chinese property market and use
COSCO Sanlin as its real estate investment and management
flagship in China. 

    Meanwhile, Shanghai COSCO Sanlin is the parent company
of CDC, with a 56.16% stake under control.

    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/Shanghai
     Ms. Joy Tsang
     Tel:    [phone]
             [phone]
             [phone]
     Email:  [e-mail]

    US
     Mr. Ishviene Arora
     Taylor Rafferty (IR/PR Contact in US)
     Tel:    [phone]
     Email:  [e-mail]

SOURCE  Xinhua Far East China Ratings