AK&M Rating Agency confirmed the ‘A+’ reliability rating (stable outlook) assigned to TRINFICO Property Management Ltd. as per the national scale
The ‘A+’ rating qualifies TRINFICO Property Management Ltd. as a highly reliable investment company.
One of the positive arguments for the rating score is the good pace of development of TRINFICO Property Management Ltd. Despite the economic crunch Russia went through in 2008-2009, the company is expanding the scope of activity – which proves the efficiency of the development strategy chosen by the company and the high management quality. In recent years, the number of unit investment funds and assets managed by the Company has been rising, incomes growing, net value of asset and own funds of the management company also increasing. Assets managed by the company also show a steady growth as the assets of existing unit investment funds increase and new funds transfer their funds in management. As of September 30, 2011, the market value of all the assets in management was RUB 27.16 billion (19% above what it had been in late 2010). In the long term, the pool of assets managed by the company may grow further as seven new closed-end investment funds are being established. In 2010, the Company’s revenue increased 1.7-fold year-on-year to RUB 153,376 thousand. For three quarters 2011, the Company’s revenue increased by 35% year-on-year to RUB 141.163 thousand. The accelerating operating return rate indicates the positive development of the Company and the efficiency of its management.
Another powerful argument for the rating score is the constantly improving net asset value and own funds of the management company, also proving the Company’s operating efficiency and management quality. As of September 30, 2011, net value of the Company's assets increased by 25%, own funds by 2% year-on-year. These indicators had also grown considerably in 2010. As of September 30, 2011, the Company’s own funds amounted to RUB 132,293 thousand meeting the equity capital sufficiency requirements for professional players of the securities market, management companies for investment / unit investment funds and non-state pension funds approved by order № 11-23/pz-n of the FFMS as of May 24, 2011.
The Company’s financial condition may be regarded as good. The principal indicators of its operating efficiency and financial soundness are satisfactory. Overall, there is an upward trend in the Company’s profit, the growth pace being fairly good. The natural exception is the year 2008 seeing the Company’s earnings, just like those of most management companies, go down in the wake of the global financial crisis. In 2010, however, the Company posted a much higher profit. Pre-tax profit secured for three quarters 2011 increased by 43% year-on-year. In 2010, return on assets (ROA) was 53.52% exceeding the result achieved in 2009. As of September 30, 2011, ROA was 49,73%. Return on equity (ROE) also increased by 16.09 percentage points in 2010 against 2009, reaching 54.76% at the end of September 2011. This is considered to be a high result indicating the Company’s ability to generate positive cash flows.
Another positive argument is the low debt burden. With the amount of liabilities considerably below the Company’s equity capital and profit, the Company can repay all its obligations without derailing its financial stability. In 2010, debt to asset ratio was 8%. For three quarters 2011, it reached 10% yet remains fairly low. Debt to equity ratio is also favorable (11% as of September 30, 2011). Debt to revenue is also low indicating the small debt burden and essentially supporting the rating score. The Company’s debt to revenue ratio was 8.9% in 2010 and increased to 16% as of September 30, 2011. The extremely low interest expenses also prove that the company’s debt burden is a trifle. Besides, our analysis revealed that the company’s asset profile is of high quality. Overall, the Company’s assets are highly liquid which is favorable for estimating the Company’s payment capacity. Accounting liquidity value and equity to total assets ratio are also high. As of September 30, 2011, absolute liquidity ratio was 9.37, current liquidity ratio was 6.75, equity to total assets ratio was 0.90.
An essential competitive advantage for the Company is its participation in TRINFICO Group. With over 17 years of expertise, TRINFICO Group is active in all segments of the collective investment market providing the whole range of services in the Russian security market. This reduces the Company’s dependence on a single market segment and to have competitive edge in attracting customers.
One of the negative signals for the rating score is the low diversification of the Company’s activities. TRINFICO Property Management Ltd. is a niche company focused solely on the established closed unit investment funds. The range of services provided by the Company relatively narrow so that the cash flows are not diversified either. All unit investment funds managed by the Company are classified as real estate funds or venture investment funds. This, however, results from how such funds are shaped to meet the requirements of investment unit holders interested in a specific fund structure. The Company’s special profile is attributable to the structure of TRINFICO Group where other investment activities (brokerage and dealing activities, managing open-end unit investment funds, assets of non-pension funds and insurance companies, physical persons, consulting companies etc.) are farmed to other companies of the group. Therefore, the Company occupies a niche in the broadly diversified business of TRINFICO Group, which ensures better management quality through focused specialization.
Another risk factor for the Company is its strong dependence on the macroeconomic situation. The lack of economic stability, the shrinking real estate market, the collapsing stock markets and the losses their players incurred due to the global financial crisis resulted in an outflow of some clients from the pooled investment market – this trend was particularly obvious in 2008. This, along with the little certainty in the way of how the markets may further develop, still constitutes an essential risk factor. At the same time, the company’s 2009 result proves that the global economy trends have turned positive again, with the appreciating real estate value. Besides, the Company’s customer base and scope of activity rose both in 2008 and in 2009, and later. Therefore, despite the high risks generated by the Company’s dependence on the macroeconomic environment, its KPIs prove the Company’s efficiency and growing loyalty of its customers even amidst the crisis.
TRINFICO Property Management Ltd. specializes in managing real estate closed-end investment funds and other closed-end investment funds. It is licensed by the FFMS of Russia for managing investment funds, unit investment funds and non-state pension funds (lic. no. 21-000-1-00719 as of May 13, 2010).
The company established in 2004 is part of TRINFICO Investment Group. As of September 30, 2011, assets managed by the Company cost RUB 27.16 billion.
This press release is based on the statement of assigning a rating score to TRINFICO Property Management Ltd.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Bank's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Company.
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).
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Press release by: A.V. Yakovenko
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