Related Fitch Ratings Content: Pandemic Progress Check: APAC Corporates
Fitch Ratings-Hong Kong/Sydney/Singapore-11 November 2020: Fitch Ratings expects corporate issuers in Asia-Pacific (APAC) to experience a gradual recovery in 2H20 from the lows of 1Q20 at the height of the coronavirus pandemic shock.
We have raised our 2H20 revenue forecasts slightly for six sectors from our expectations in late-1Q20 and early 2Q20 – Autos, Consumer Tech, Palm Oil, China Homebuilding, China Engineering and Construction (E&C), and Indonesian Homebuilding. We have kept them steady for three sectors – Downstream Oil & Gas, Upstream Oil & Gas, China Metals & Mining – and revised them down for Utilities and Indonesian Coal.
Aggregate revenue for our APAC portfolio of 299 publicly rated corporates is now likely to be 12% lower in 2020 and 7% lower in 2021 than our pre-pandemic forecasts at the end of February 2020. Our aggregate EBITDA forecast is now 21% lower than our pre-pandemic forecast for 2020, and 15% lower for 2021.
Chinese E&C and Metals & Mining stand out, with revenue forecasts post-pandemic higher than prior to the crisis. Chinese construction activities and property investment picked up rapidly in 2Q20, boosted by government measures to support economic growth via infrastructure investment.
The Downstream Oil & Gas, Upstream Oil & Gas and Indonesian Coal sectors are more exposed to the risk of both sporadic recurring lockdowns and a failure to contain the virus in 2021, as fuel demand would be lower than in our base assumption. Conversely, the Utilities, Palm Oil, and China E&C sectors have the lowest exposure risk here. Utilities and Palm Oil demand is less vulnerable to the pandemic shock, while Chinese E&C firms would be beneficiaries of greater stimulus spending.
The report, “Pandemic Progress Check: APAC Corporates”, summarises the key points from 11 separate Pandemic Progress Check sector reports, and is available at www.fitchratings.com or by clicking on the link.
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