The ‘A' rating indicates that OJSC Stroytransgaz is qualified as a highly reliable borrower. Risk of a delay in meeting liabilities is relatively low, restructuring risk for the loan / part of the loan is minimal.
The company’s rating score is supported by the recently observed growth of its revenue and incomes. For 2011, revenue of OJSC Stroytransgaz increased by over 27% to almost RUB 41.4 billion. Debt revenue ratio and floating debt to revenue ratios have recently improved. In particular, the short-term liabilities on credits and loans to revenue ratio as of December 31, 2011 was 0.16 (0.41 in 2009). As of the end of 2011, Interest Coverage Ratio (EBIT to interest ratio) was 1.54.
One of the strong arguments for the high rating score is the company’s efficient business activity and good pace of development. OJSC Stroytransgaz has been improving its key performance indicators and increasing its incomes over the last 12 months. As of the end of 2011, operating profit of OJSC Stroytransgaz exceeded RUB 4.98 billion, net profit was RUB 851 million. In 2011, the margin indicators reached their six-year high. Return on assets (ROA) at the end of the fourth quarter 2011 increased to 1.38%, return on equity (ROE) to 18.74%, return on invested capital (ROIC) to 2.53%, net profit margin to 2.06%, EBITDA margin to 13.4%, operating profit margin to 12.05%.
An essential argument for the company’s credit score is that OJSC Stroytransgaz repaid its liabilities on credits and loans for about RUB 12 billion with the funds obtained from the disposal of its non-core assets, in March 2012. Revenue from the non-core assets will cover repayment of the principal and interest payable by OJSC Stroytransgaz for a period up to April 2013.
A good argument for the rating score is the business diversification strategy pursued by the company. OJSC Stroytransgaz has recently entered the electric power facilities construction and road building markets which, apart from the higher margin, adds stability against industry-specific risks.
The favorable debt profile also supports the rating score. Long-term loans, the most reliable financing method in the way of investment activity, account for the greater part (78%) of OJSC Stroytransgaz's portfolio, which reduces the short-term debt burden and increases financial soundness. Besides, the share of loans denominated in Russian rubles is currently 100% of the total loans, which minimizes foreign currency-related risks as long as the financial markets are lacking stability.
At the same time, despite the appearing decreasing trend in the amount of the company's debt liabilities, total debt burden on OJSC Stroytransgaz is still considerable, which is restrictive on the company's rating. As of January 1, 2012, total debt on the company’s credits and loans exceeded RUB 29.4 billion.
Another matter restrictive on the rating score is the low share of own funds in the capital of OJSC Stroytransgaz (a mere 5% as of the end of 2011).
The company has been showing a downward trend in its assets since the start of 2011 which also exerts pressure on the rating score. For 2011, assets of OJSC Stroytransgaz decreased by 31%. Apart from the company’s strategy to dispose of its low-efficient non-core assets, this is down to the company’s loan servicing obligations.
OJSC Stroytransgaz established in 1990 is one of the largest real estate development companies in Russia and the CIS. For over 20 years, Stroytransgaz has been implementing and managing building and construction projects in the fuel and energy sector and other industrial construction sectors. The company provides all types of services for the development of large-scale projects from project documents to guarantee maintenance. Stroytransgaz Group manages construction, engineering, industrial, oil/gas and financial companies. It has business units in 9 regions of Russia and 14 countries of the world. As of late 2011, assets of OJSC Stroytransgaz totaled RUB 50 billion.
This press release is based on the statement of assigning a credit quality rating to OJSC Stroytransgaz.
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 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).
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.G. Chumachenko
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.