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RAEX assigned STROYGAZMONTAZH ‘ruBBB+’ level of creditworthiness
03.05.2017
Expert RA Rating Agency (RAEX) has revised STROYGAZMONTAZH non-financial company’s rating using new methodology and assigned ‘ruBBB+’ level of creditworthiness (the same as previous ‘A+(III)’ level), stable outlook. Earlier it had ‘A+(III)’ level, stable outlook.

The key factors, which positively influence the credit score, are the high level of return on equity and financial stability. For the period from 30.09.2015 to 30.09.2016, ROA equals to 8.5%, ROE — 80.5%, ROS — 7.6%, EBITDA margin — 12.1%. Relatively low level of the total debt load had a positive effect on the rating as well. CFO, FCF, FFO (for 12 months)/debt (as of September 30, 2016) is 12.2%, 24.0%, 60.1% respectively; Debt (as of September 30, 2016)/EBITDA (from September 30, 2015 to September 30, 2016) is 1.76. Total loan volume has declined, compared with June 30, 2016, and equals to ₽53 billion.

“The Company is a longtime leader in the oil and gas construction industry. It has vast experience in the field of infrastructure projects, makes business with major Russian oil and gas companies, and participates in state tenders. These aspects positively influences on level of creditworthiness,” – says Pavel Mitrofanov, RAEX’s Managing Director on Corporate and Sovereign Ratings.

Wide geographic scope of operation, low level of exchange risks are the other positive attributes. High level of liabilities diversification to creditors supports the rating as well. Nearly 19% of liabilities relates to the largest creditor bank, which provides the credit of ₽48.8 billion to the company. The main part of the base cost of installation and construction works relates to the tubular goods. The procurement is centralized and performed with due regard to the working schedule. Thus, it’s easier to be more independent from suppliers. Another positive attributes are high quality of strategic support and high level of risk management. Risk management is performed by one specific department. All assess procedures and risk identification procedures are performed in accordance with specific rules.

Limiting factors also include moderately high level of current debt load: interests due and debt payment (from September 30, 2016 to September 30, 2017)/ EBITDA (from September 30, 2015 to September 30, 2016) is 0.27 and 1.13 respectively; CFO/debt payment (from September 30, 2016 to September 30, 2017) is 19%. Debt payment for 12 months following the reporting date is expected to be ₽32.4 billion (₽7.7 billion relates to interests), and the company still has available credit lines.

In this regard was named rather low liquidity level (as of September 30, 2016 an absolute liquidity ratio is 0.11; day-to-day liquidity ratio is 0.77), while the short-term liabilities of the company amount to ₽210 billion. Calculation of day-to-day liquidity was performed with due regard to current assets with adjusted price, as well as non-current assets, which can be used for loan-based funding. Besides, agency experts underline the availability of additional sources of liquidity, which helps to maintain financial solvency at a high level. Current stress ratio, which reflects the coverage of total balance sheets of the company with assets adjusted on quality, equals to 0.72. One more limiting attribute is rather low forecast liquidity. Forecast liquidity rate is 1.07 as of September 30, 2016 based on 18 months period.

Among other limiting attributes were named rather high level of dependency on the major customer (over 74% of total revenue for the last 12 months relates to companies of Gazprom Group), low level of information transparency (STROYGAZMONTAZH’s consolidated financial statements are not disclosed to public), low level of insurance coverage and no evident upward development at the oil and gas construction market.

The core activities of STROYGAZMONTAZH Limited Liability Company include cross-country pipeline construction, gas field development, gas and oil processing plants development, Russian regions gasification, major repairs and gas pipeline diagnostics. The Company is engaged in several oil and gas construction projects of federal importance, as well as civil infrastructure projects. As of September 30, 2016 the Company’s assets totaled ₽261 billion (based on unaudited IFRS statements); corporate capital is ₽24 billion. The revenue from September 30, 2015 to September 30, 2016 is ₽238 billion; net profit is ₽18 billion.
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