National Rating agency upgraded RAIL1520’s credit scoring up to A+ level ac-cording to the national credit scale

RAIL1520 OJSC (RAIL1520) was established in the beginning of 2011 and was intended to provide operational leasing services (long-term, over three years long leasing) in the field of the railroad freight rolling stock. The company specializes in leasing of the freight cars to the major companies in the transport, chemical, metallurgy, coal, forestry, oil and gas industries. Moreover, RAIL1520 tenders its services in the redemption leasing (rail operators and owners can sell its cars to the lessor and continue to use them within the terms and conditions of the leasing agreement).

RAIL1520’s core customers are Siberian Coal Energy Company OJSC (SUEK), NefteTransService CJSC, Freight Forwarding Company Nizhegorodsky Express LLC, Eurosib SPb – Transport Systems CJSC, URALCHEM-TRANS LLC, ZapSIb Transservice LLC, TransGroup AS LLC, FinTrans LLC, and many others. The lessor cooperates with the following banks – Sberbank of Russia OJSC, NOMOS-BANK OJSC, Eurasian Development Bank, and also with OJSC Alpha Insurance, the insur-ance company.  

Throughout 2012 RAIL1520 revealed a reliable progress: the new business volume at 9 months of 2012 totaled 10 billion rubles, which enabled the lessor to join TOP-15 of the leasing companies in value terms of the new business. By 30.09.2012 the lessor’s leasing portfolio made 13 billion rubles. The major transactions (i.e. over 1 billion rubles and long-term – over four years long – transactions) prevail in the structure of the leasing portfolio. The ratio of the delay payments in course of the portfolio is 0% and is explained either by short lifetime of the lessor or by the extremely reliable customers the company cooperates with.

High business performance rate by RAIL1520 has affected its financials. According to RAS reports (Russian Accounting Standards), the company’s assets boosted during 9 months of 2012 more than twofold and made 17.1 billion rubles by 30.09.2012.  The company’s capital net worth increased 10 times and hit the amount of 3.2 bln roubles.  The operating income at the third quarter of 2012 equals to 2.7 billion rubles, and the net income of the same period is 0.2 billion rubles.

A substantial growth of the operating and financial performance figures was determined by several factors such as early stage of the company’s growth (low base effect), excess demand for the services provided by the lessor at the leasing market, reliable funding base, support provided by the key business partners (NOMOS-BANK OJSC, Tikhvin Freight Car Building Plant CJSC and the others). The rating agency emphasizes the company’s successful advancing its goal – to become a leader at the rolling stock operational leasing market.

In order to finance its business activity, the lessor obtains credits from the Russian leading banks: Sberbank of Russia OJSC, NOMOS-BANK OJSC, Eurasian De-velopment Bank; the total amount of the credit by the end of the third quarter of 2012 made 13.2 billion rubles. The Agency evaluates the company’s debt burden to be high: as of 30.09.2012 the net debt exceeded the extrapolated annual receipts of the company 3.5 times, and the capital net worth – 4 times. A low level of the company’s capitalization is worth mentioning: the ratio of the net worth, or the own funds, on the liabilities side was less 19% by the end of the third quarter of 2012. Nevertheless, one should take into account the fact that the excessive debt burden is determined by the stage of the company’s development, which means the current key investments to create its own fleet, and the income on the investments made are expected the following time period. One of the company tasks is to perform a regular reduction of the debt burden till an appropriate, somewhat comfortable, level by the end of 2013-2014.

“A reliable progress of the lessor in 2012 expressed in upward trend of its operating and financial performance figures; it also made possible to take a strong line at the railroad freight rolling stock operational leasing market for the company. The progress determined the advancement of RAIL1520’s ranking score. This score was also positively affected by such factors as sufficiently high liquidity and profitability figures at 9 month of 2012, as well as by the efficient management quality and the company transparency. An “issue” with the lessor is its yet brief experience, too many partners- and contractor-oriented actions, the macroeconomic risks affecting the freight market in Russia”, – says Natalya Soboleva, an analyst of the National Rating agency.

The lessor was assigned an A-level individual credit scoring for the first time on 14.12.2011 and placed in the section “Holding and financial companies” of the Agency’s rating list. In 2012 the credit scoring was advanced to A+ level and labeled in the section “Leasing companies”.

The lessor generates the financial statements and data reporting either within Russian Accounting Standards, or within the international ones. The financial statements and reporting in terms of IFRS is carried out annually; Delloite & Touche CIS acts as a certi-fied public accountant.