HONG KONG, March 17, 2026. CSPI Ratings has assigned the global scale long-term issuer credit rating (LTICR) of ‘A-’ to Xuancheng State Control Investment Development Group Co., Ltd.( XSCID), with a stable outlook.
XSCID, as a key local state-owned enterprise in Xuancheng City, Anhui Province, serves as the primary platform for engineering construction and state-owned capital investment operations within the city. Its core businesses include aluminum processing, engineering construction, building materials sales, real estate, fuel distribution, security services, transportation, steam supply, grain and oil sales, as well as guarantee services. XSCID is wholly owned by the State-owned Assets Supervision and Administration Commission of the Xuancheng Municipal People’s Government (Xuancheng SASAC), which holds 100% of the company’s equity and acts as its sole shareholder and ultimate controlling entity. The rating assigned to XSCID reflects its standalone credit profile (“SACP”) of “b,” as well as our view that the Xuancheng government would have an extremely strong willingness to provide additional support should the company encounter financial distress.
KEY RATING RATIONALES
Credit Strengths
Regional Core Entity for Engineering Construction and State-Owned Asset Operations. XSCID is a major state-owned enterprise in Xuancheng City, Anhui Province, with significant local influence. The company not only undertakes the core tasks of urban infrastructure construction but also plays a vital role in various livelihood and public service sectors. Its business scope covers infrastructure construction, fuel distribution, security services, transportation, steam supply, grain and oil sales, and electricity supply, forming a diversified industrial layout and occupying a pivotal position in the local economic structure. The company’s core businesses are stable and sustainable, providing strong support for the efficient and steady operation of the city as well as for regional economic development. Given its critical role in regional infrastructure development and state-owned asset operations, we believe that, should XSCID encounter operational or financial stress, the local government would have a strong incentive to implement necessary measures to support the company’s continued operations, including the provision of financial assistance if required, in order to safeguard regional economic and social stability.
Strong and Ongoing Support from the Xuancheng Government. XSCID is wholly owned by the Xuancheng SASAC. In recent years, the company has continuously received strong support from the local government, including capital injections, asset transfers, and fiscal subsidies. In 2023 and 2024, the company received government subsidies of RMB210 million and RMB290 million, as well as interest subsidies of RMB1.03 billion and RMB1.07 billion, which effectively boosted profitability. The government also strengthened the company’s capital base through multiple injections of subsidiary equity and investment properties. In addition, the company’s core senior management personnel are appointed and evaluated by the local government, which is deeply involved in shaping the company’s investment and operational strategies. Overall, the Xuancheng government exercises strong control and influence over the company, providing a solid support for its development.
Robust Economic Fundamentals and Stable Credit Profile of Xuancheng City. Xuancheng is a prefecture-level city in Anhui Province, located in the southeastern part of the province and bordering Jiangsu and Zhejiang. The city’s economy is driven primarily by the automotive components and new energy industries, with its industrial structure continuously improving and growth momentum remaining strong. In 2025, Xuancheng achieved a GDP of RMB214.86 billion, representing a year-on-year growth of 6.0% at constant prices, among the highest in the province. The city ranked 11th among Anhui’s 16 prefecture-level cities in terms of economic scale, with steady expansion. Per capita GDP reached RMB86,298, reflecting ongoing improvements in productivity and efficiency. Supported by steady economic growth, Xuancheng’s fiscal operations remain generally stable, with sound per capita fiscal performance. We expect the city’s overall credit profile to remain stable in the coming years, creating a favorable external environment for the development of regional enterprises.
Credit Weaknesses
High Financial Leverage. XSCID carries a substantial debt burden. We estimate that as of September 2025, the company’s total interest-bearing debt amounted to RMB31.99 billion. By the end of 2024, its debt-to-capital ratio stood at 50.0%, and we expect this ratio to remain above 50% during 2025–2027. Although the company has no entrusted construction projects and its engineering business has contracted, ongoing investment needs in projects under construction will require further borrowing in the coming years. In addition, the company’s external guarantees are large, amounting to RMB9.82 billion in 2024 and RMB9.80 billion in September 2025. Of these, guarantees provided by its guarantee service totaled RMB 5.72 billion and RMB 4.89 billion, respectively. Relative to its debt scale, the company’s EBITDA is limited. Our estimates suggest that during 2023–2027, its weighted average debt-to-EBITDA ratio will be 52.2x, while its EBITDA interest coverage ratio will be only 0.5x. Overall, we expect the company’s leverage to remain elevated in the coming years, which may exert pressure on cash flow stability and debt-servicing capacity.
Weak ROIC. Due to its industry operating model and significant exposure to public-service functions, the company’s asset utilization efficiency remains relatively low. Certain segments, including transportation and grain and oil trading, operate with thin margins, which constrain overall asset efficiency and profitability. We project that the company’s weighted average EBITDA margin will be approximately 12.5% over the 2023–2027 period. While EBITDA margin is reasonable, returns relative to the company’s sizable capital base remain weak. We estimate a weighted average ROIC of approximately 1.6% during the same period, reflecting limited profitability in relation to invested capital.
RATING OUTLOOK
The rating outlook is stable, which reflects our expectation that the credit profile of the Xuancheng city governments will remain stable and that XSCID will be able to maintain its strategic role in the development of Xuancheng going forward.
We would consider a rating downgrade if 1) XSCID’s ties with the local government loosen from the current level; 2) the local government’s fiscal deficit expands considerably, or its debt growth rate increases substantially; and/or 3) XSCID’s market position in the regional engineering construction and state-owned asset operation sectors declines significantly.
We would consider a rating upgrade if 1) the local government’s economic development level improves or its fiscal revenue scale expands notably; and/or 2) XSCID’s importance in the region increases significantly.
ANALYSTS CONTACT
Primary Analyst
Winnie Guo
+852 3615 8344
Secondary Analyst
Siqi Lin
+86 755 8321 0225
Committee Chair
Larissa Wu
+852 3615 8317
MEDIA CONTACT
RATING SERVICE CONTACT
Date of Relevant Rating Committee: 13 March 2026
Additional information is available on www.cspi-ratings.com
Related Criteria
General Corporate Rating Criteria (15 March 2018)
Corporate Financial Adjustments and Ratio Definitions (7 May 2018)
Government-Related Entities Rating Criteria (31 August 2018)
Corporate Issuance Rating Criteria (11 March 2022)
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