BAKU, Azerbaijan, Apr. 23
By Klavdiya Romakayeva - Trend:
Fitch Ratings projects revenue growth for UzAuto Motors JSC by two percent on average in 2021-2024, Trend reports with reference to Fitch Rates Agency.
Fitch Ratings has assigned UzAuto Motors JSC (B+/Stable) upcoming $300 million senior unsecured Eurobond an expected rating of B+(EXP),
According to the agency, the recovery rating amounts to 'RR4'/50 percent.
UzAuto Motors is the dominant car producer in Uzbekistan. Fitch has applied its 'Government-Related Entities Rating' Criteria and assessed the linkage between UzAuto Motors and its sole indirect shareholder, Uzbekistan (BB-/Stable), as 'Moderate-to-Strong', which has led to a one-notch discount from Uzbekistan's rating.
In addition, Fitch assesses UzAuto Motors's Standalone Credit Profile (SCP) at 'b'.
Fitch's key assumptions used in the agency's rating scenario for the issuer include the following:
- revenue growth by two percent on average in 2021-2024;
- EBIT (Earnings Before Interest and Taxes) margin of 8.3 percent on average in 2021-2024;
- normalization of working capital in 2021-2024 after significant churn in 2020;
- capital expenditure of about 10 percent of sales in 2021 and three percent in 2022, driven by a significant capex program, and then a decrease in capex to about one percent in 2023 after completion of the investment;
- commencement of dividend payments in 2023;
- a bond issue of $300 million and other financing of approximately $70 million;
- no M&A (Mergers and Acquisitions) deals in the next four years.
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