S&P Global Ratings changed its outlook on China Railway Construction (HKG:1186, SHA:601186) to negative from stable, while maintaining its A- long-term issuer credit rating, among others, according to a Friday release.

The rating agency expects the company to have elevated financial leverage over the next one to two years amid heightened competition and weak funding conditions.

Orders for China's engineering and construction sector dropped by 2% in the first quarter following a 5% contraction last year.

Still, the company will see improved margins and cash flows due to an optimized project mix, gradual cost reduction, and increased cash collection measures.

Significant shifts in the company's EBITDA margin and revenue, cash collection levels, and capital allocation could trigger future rating actions, S&P said.