Request for Comments: Industry Credit Guidelines for Global Automobile Manufacturers

HONG KONG, 17 August 2020. Pengyuan International has today published the industry credit guidelines for global automobile manufacturers for public consultation. These criteria will be effective immediately on the date of final publication, and we intend to complete the review of all affected ratings, if any, within six months thereafter. We expect no impact on our current rating portfolio.
We would appreciate comments on these criteria from investors and other market participants. The request-for-comment version of the criteria and analyst contact details are available via the “Preview” and “Download” button on this page.

These criteria, applicable to global automobile manufacturers, act as the supplementary guidance on PENGYUAN’s General Corporate Rating Criteria. These credit guidelines outline the rating framework on how PENGYUAN will evaluate the creditworthiness of automobile manufacturers. In order to more precisely reflect the risk profile of automobile manufacturers, PENGYUAN make some adjustments to General Corporate Rating Criteria on the weightings allocated to sub-factors of operation profile and add sales volume as a primary factor in assessing the operating scale. We believe automobile manufacturers industry features a high industry risk, and this industry is facing the threat from technological dislocation that frontier technologies in autonomous driving, vehicles connectivity, powertrain electrification as well as shared mobility are reshaping the growth path of this industry. 

PENGYUAN’s assessment on sampled automobile manufacturers reveals that their business profile is primarily backed by their operation profile that considers carmakers’ operating scale, competitiveness in product, services and technology, brand image and market share, operating efficiency as well as business diversity. PENGYUAN also view that the notable impact of macroenvironment on automakers cannot be overlooked as business operation of an automaker with global footprint is highly subject to some macro factors in different jurisdictions, including industry regulations and policies as well as the efficiency of the financial system. PENGYUAN believe that the partial consolidation approach to deal with our leverage and profitability ratios is necessary when it comes to automakers with significant profit contribution from their joint ventures. This is because equity method that is applied to the accounting treatment to joint ventures might put some hidden risk of joint ventures off the balance sheet of an automaker.  


ANALYST CONTACTS
Primary Analyst
Danny Chen
+852 3615 8346

danny.chen@pyrating.com

Secondary Analyst
Ke Chen, PhD
+852 3615 8316
ke.chen@pyrating.com

Committee Chair
Ke Chen, PhD
+852 3615 8316
ke.chen@pyrating.com

MEDIA & EVENTS ENQUIRIES
Charley Lui
+852 3615 8296
charley.lui@pyrating.com

RATING SERVICES ENQUIRIES
Gloria Song
+852 3615 8324
gloria.song@pyrating.com


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