Xinhua Far East Upgrades Issuer Credit Rating of Shenzhen Airport Co., Ltd. to A+; Rating Outlook Remains Stable

Xinhua Far East Upgrades Issuer Credit Rating of Shenzhen Airport Co., Ltd. to A+; Rating Outlook Remains Stable

July 03, 2006

    HONG KONG, July 3 /Xinhua-PRNewswire/ -- Xinhua Far
East China Ratings ("Xinhua Far East") today
upgraded the issuer credit rating of Shenzhen Airport Co.,
Ltd. ("SACL" or "the Company", SZ A
000089) from A to A+; however, the Company's rating outlook
remains stable.

    The rating action was prompted by the successful
disposal of SACL's high-risk financial investments which
will now enable SACL to focus on its core airport
operations business. The upgrade takes into account views
about the Company's future growth potential in light of the
Pearl River Delta's vibrant economy, as well as improvements
in daily aircraft movements and the use of bigger aircraft
by airlines. The rating also considers the Company's sound
profitability and its conservative capital structure.

    The Company recently announced that it had already
disposed of its high-risk financial investments, with
RMB868.3 million going to Shenzhen Airport Group Co., Ltd.
("the Group"), SACL's controlling shareholder,
during the non-tradable share reform. In return, SACL
obtained a 21% interest in Chengdu Shuangliu Airport, on an
appraisal value of RMB382.6 million, as well as part of the
Shenzhen Airport facilities, on an appraisal value of
RMB53.6 million. It also received a cash payment of
RMB432.1 million from the group. 

    In Xinhua Far East's opinion, the asset replacement
arrangement will enable SACL to concentrate on its core
airport operations business and end its exposure to recent
financial investment losses. In 2003 and 2004, it reported
investment losses of RMB2.6 million and RMB40.4 million
respectively. The acquisition of its interest in Chengdu
Shuangliu Airport will also enable it to further benefit
from Western China's rapid economic development.

    The vibrant economy in the Pearl River Delta region
helped SACL report turnover of RMB1,013 million in 2005,
representing a compound annual growth rate
("CAGR") of 13% in the period from 2001 to 2005.
However, the Company's average daily aircraft movement rate
was around 415 times per day in 2005, indicating a 20%
upside potential for improvement, given that the daily
aircraft movement limit regulated by the General
Administration of Civil Aviation of China
("CAAC") is 500 times per day.  The bigger
aircrafts used by airlines to meet surging market demand
will also expand SACL's revenue base, with the unit charge
for bigger aircraft higher than that for smaller aircraft.
As a result, Xinhua Far East believes that the Company will
maintain its strong growth, at least in the short to medium
term. 

    SACL's credit profile is further enhanced by its sound
profitability and conservative financial policies, with the
Company reporting an EBIT margin of 37%, 37.7% and 41.6% in
2004, 2005 and the first quarter of 2006 respectively,
while its gross debt to total capitalization ratio was
1.7%, 1.2% and 6.8% for these periods. 

    Shenzhen Airport Co., Ltd. ("SACL" or
"the Company") is the operator of Shenzhen
airport. Passenger throughput, cargo throughput and
aircraft movement in Shenzhen Airport reached 16.3 million
passengers, 0.47 million tons and 0.15 million times in
2005, representing a year-on-year increase of 14.25%,
10.19% and 7.76% respectively from that of 2004 and ranking
it fifth, forth and sixth among civic airports in mainland
China. Shenzhen Airport Group Co., Ltd. ("the
Group") is the controlling shareholder of the Company,
with a 54.63% stake under control.

    Chengdu Shuangliu Airport reported passenger
throughput, cargo throughput and aircraft movement of 13.9
million passengers, 0.25 million tons and 0.13 million
times, ranking it sixth, sixth and the seventh respectively
among civil airports in mainland China in 2005. 

    SACL is also a constituent of the Xinhua/ FTSE China
200 Index and, as of market close on June 30, 2006, its
total market capitalization and investable capitalization
were RMB7,990 million and RMB3,995 million respectively. 

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

    Note to Editors:

    About Xinhua FTSE China 200 Index

    Xinhua FTSE China 200 Index is the large cap index in
the Xinhua FTSE China A Share Index Series and includes the
top 200 companies in China by market cap. It is designed as
a tradable index and is calculated in real-time every 15
seconds.  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 20 news bureaus
and offices in 19 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]
             [phone]
             [phone]
     Email:  [e-mail]

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

SOURCE  Xinhua Far East China Ratings