Moody's Investors Service has changed to negative from stable the outlook of China Automation Group's (HKG:0569) "Ba3" corporate family and senior unsecured bond ratings after the company issued a profit warning on January 16.

At the same time, Moody's has affirmed both ratings.

Moody's says that the change in outlook reflects China Automation's slowing top-line growth and deteriorating profitability against the backdrop of a challenging operating environment for railway equipment suppliers in China. The profit warning indicates the presence of such a trend and it is likely that the company's near-term operating performance will be much weaker than the previous expectations of Moody's.