Press Releases / 06.05.2014

Press Release as of 06.05.2014

PJSC «Stroytransgaz»

CJSC AK&M Rating Agency affirmed the national scale credit rating assigned to Public Joint Stock Company Stroytransgaz / PJSC Stroytransgaz, PJSC STG) at 'A', tier 3. The outlook is stable.


CJSC AK&M Rating Agency affirmed the national scale credit rating assigned to Public Joint Stock Company Stroytransgaz / PJSC Stroytransgaz, PJSC STG) at 'A', tier 3. The outlook is stable.

The 'A' rating indicates that PJSC Stroytransgaz qualifies as a highly reliable borrower. Risk of a delay in meeting obligations is relatively low, full or partial debt restructuring risk is minimal.

We tend to regard the large-scale contracts for construction services concluded and currently implemented, the significant amount of contracts pending completion and payment by the customers this year, the comfortable debt profile in terms of maturity and currency, the appreciable financial backing from PJSC Stroytransgaz's principal shareholder, and the continuing business optimization process at the Company as the major positive rating drivers for PJSC Stroytransgaz.

The Company is working hard to expand the scale of business, participating in tenders and heading for new contracts. This offers hope for a higher incoming cashflow at PJSC Stroytransgaz in the coming years.

At a rough guess, the contracts in the closing stage pending full payment by the customers this year alone amount to almost RUB 14 billion. This contribution to the aggregate cash inflow puts the Company in a strong position to service the current loan debt over the forthcoming 12-month period (the amount payable under the debt service schedule is estimated at ca. RUB 4 billion).

The Company's high credit rating is also supported by its comfortable debt profile. Long-term loans, the most reliable funding source in the way of investment activities, are dominating PJSC Stroytransgaz's portfolio (81%), which reduces the short-term debt burden and enhances the Company's financial position. Besides, 100% of the loans taken out by PJSC Stroytransgaz are denominated in Russian rubles, which minimizes the Company's forex risks amid the financial market turbulence.

It should also be highlighted that the Company's principal lender is its major shareholder accounting for 70% of its long-term loans. With this in mind, the Company's long-term debt has an obvious flexibility in the upward direction (with more headroom to borrow). Therefore, the Company's long-term borrowings from its major shareholder may be regarded as a reliable financial backing, a positive signal for its credit rating.

The Company's ongoing streamlining and business diversification process is a major argument for the rating. Since recently, PJSC Stroytransgaz has been committed to high-margin business segments such as the construction of power engineering facilities and road building, which increases immunity against industry-specific risks.


At the same time, the permanently heavy debt burden, the lower sales revenue and shrinking profits, as well as the downward trend in the amount of equity capital in the wake of the growing retained loss are exerting pressure on the Company's rating.

By the end of 2013, the Company's total loan debt had increased to RUB 11.5 billion. Therefore, PJSC Stroytransgaz is still saddled with a heavy loan debt, which we regard as a negative rating driver.

In 2013, the total 12-month revenue of PJSC Stroytransgaz decreased by almost 16% to RUB 21 billion. Net profit for the same period turned from positive to negative: the Company posted RUB 1.4 billion in net loss.

The Company's equity capital for 2013 decreased by RUB 1.2 billion resulting from the growth of its retained loss by more than RUB 1.3 billion for the same period. This downward equity capital trend driven by the growing retained loss is another risk factor for PJSC Stroytransgaz preventing a higher credit rating.


PJSC Stroytransgaz established 1990 is one of the largest construction and development companies in Russia and the CIS implementing and managing industrial construction projects in the fuel / energy and other sectors for over 20 years. The Company provides all types of large-scale project implementation services from project documents to guarantee maintenance. The company's units are located in 9 regions of Russia and 14 countries of the world. At the end of 2013, equity capital of PJSC Stroytransgaz was RUB 3.2 billion, assets totaled RUB 30.6 billion.

Full name: Public Joint Stock Company Stroytransgaz.

Short names: PJSC Stroytransgaz, PJSC STG.

This press release is based on the statement of assigning a credit rating to PJSC Stroytransgaz.

The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's creditworthiness 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).

CJSC AK&M Rating Agency

ul. Gubkina 3

Moscow, Russia

Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.