AK&M Rating Agency confirmed the ‘B++’ credit rating (stable outlook) assigned to Spectr Invest as per the national scale revising the outlook from stable to positive. The ‘B++' rating indicates that Spectr Invest is qualified as a sufficiently reliable borrower (the highest sub-grade of the ‘B' grade). Risk of a delay in meeting liabilities is moderate, restructuring risk for the loan / part of the loan is insignificant.
The rating score is essentially supported by the company’s operating progress. Assets held in trust by the company amounted to RUB 17.9 million as of January 1, 2010, RUB 71.7 million as of January 1, 2011, RUB 120.2 million as of April 1, 2011, increasing almost 7-fold in two years.
In 2010, the company’s own portfolio increased by 85% to RUB 532.4 million. Amount of transactions for brokerage services increased more than twice from RUB 95,117 million to RUB 193,662 million in 2010.
Net income from the company’s own portfolio increased 31-fold in 2009. Net income from the company’s own portfolio increased grew by almost 25% to RUB 28.1 million. Income from depositary services increased by 15% to RUB 1.8 million in 2010.
The company’s earnings from trust management activities rose almost 10-fold to RUB 1.8 million. Seeing the earnings from trust management activities reach RUB 1.3 million in the first quarter 2011 assumes the company may easily improve its 2010 result.
Income from brokerage services increased by 32% from RUB 3.5 million to RUB 5.1 million. The steadily growing scope of activity and incomes is definitely favorable for the rating score and financial projections.
The company’s customer base is expanding steadily. This, amidst the crisis, proves high customer loyalty the company can rely on. With the current trends in mind, the number of trust management contracts might grow considerably in future (which manifests itself in the first quarter 2011).
The company’s own portfolio is sufficiently reliable and profitable. Net income from its own portfolio increased by almost 25% to RUB 28.1 million in 2010. Bonds of relatively reliable first-tier and second-tier issuers account for most of the portfolio (about 96%). This cuts down market risks yet increases the company’s dependence on the bond issuers’ credit capacity. The company features high portfolio diversity in the way of issuers and industries. The structure of assets managed by the company is also of high quality, the risk to profitability ratio may be regarded as extremely low.
The relatively high debt load constitutes a risk factor for the company. In 2010, the company’s obligations on credits and loans decreased by 11% to RUB 113.4 million. Aggregate liabilities, however, increased considerably from RUB 242 million to RUB 534.6 million, i.e. more than twice.
EBIT to debt ratio increased in 2010 from 12% as of 1/1/2010 to 27.34% as of 1/1/2011. EBIT to debt ratio including accounts payable and other liabilities decreased from 6.2% as of 1/1/2010 to 5.8% as of 1/1/2011
All debt liabilities of the company are short-term obligations, the greater part of them being credits and loans (under repo contracts).
Debt to asset ratio (CAR) of the company was 0.17 in 2010 (0.39 in 2009). Total ratio of liabilities to assets was 0.84 in 2010 against 0.74 in 2009.
The low share of the company’s own funds in its liabilities produces a negative impact on its reliability and certainly, on the rating score. At the same time, the company’s assets shrank slower than liabilities in 2010. Another positive signal is that the company’s equity capital grew in 2009-2011. Besides, the liabilities of Spectr Invest are well offset by its assets.
In 2010, Spectr Invest increased its profit and profitability. In 2009, its balance sheet profit was RUB 10.0 million, net profit was RUB 7.3 million (65% and 73% above the respective results for 2008). In 2010, balance sheet profit of the company reached RUB 24.9 million, net profit was RUB 18.5 million (growing by 150% or 2.5-fold year-on-year).
In 2009, return on assets (ROA) was 2.7%, return on equity (ROE) was 8.8%. In 2010, the company’s profitability indicators increased approximately twice): ROA was 5.2%, ROE was 19.4%. Overall, the profitability growth may be regarded as a positive signal.
The company has achieved high diversity of incomes. As of Q1 2011, income from the company’s own portfolio accounted for 34%, brokerage for 32%, trust management activities for 25%, depositary services for 9% of its total incomes. As a whole, the company’s growing income result from the successful operations with its own portfolio. Despite the growing customer pool, the company is dependent on several large customers. At the same time, Spectr Invest is actively developing trust management and direct investment segments underpinning future diversification and stability of income.
The company’s essential dependence on the securities market environment also generates risk for the company. The principal reason is that the company’s earnings depend on the volume of funds held in trust and changes in the value of securities constituting the company’s own portfolio. Now that the global economy lacks stability and the stock markets are volatile, the unsteady cash flows constitute an essential risk factor, especially with the high dependence on the earnings from the company’s own portfolio. However, this situation is not unique and actually challenges most of investment companies. Also, the key performance indicators indicate the growing confidence of the company’s customers and the high performance even in crisis time.
Spectr Invest established in 2003 specializes in operations in the security market. In the Russian financial market, the company is focused on asset trust management services and operations with its own securities portfolio. Another priority for Spectr Invest is performing direct investment operations. The company also provides brokerage and depositary services. As of January 1, 2011 its assets amounted to RUB 639.1 million. At the end of Q1 2011, assets of Spectr Invest rose to RUB 855.8 million. As of the start of 2011, net asset value totaled RUB 104.6 million and increased to RUB 106.3 million at the end of the first quarter 2011. Assets held in trust totaled RUB 17.9 million as of January 1, 2010, increased to RUB 71.7 million as of January 1, 2011 and to RUB 120.2 million as of April 1, 2011. The company’s own portfolio cost RUB 532.4 million as of January 1, 2011.
This press release is based on the statement of assigning a rating score to Spectr Invest.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities.
AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.
AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).
AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.
CJSC Analysis, Consulting and Marketing Rating Agency
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Press release by: A.Y. Zolotokopov
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