Moody's upgrades KTZ rating

28-03-2024

The international rating agency Moody's Investors Service (Moody's) has upgraded the rating of NC Kazakhstan Temir Zholy JSC from Baa3 to Baa2, the outlook is stable.

The rating upgrade reflects sustained improvements in the operational and financial performance of NC KTZ JSC, as well as higher creditworthiness indicators.

According to the Agency, KTZ demonstrates significant revenue growth and good profitability. Revenue increased 13% in 2021, 16% in 2022 and 26% in the first nine months of 2023, and could grow 15%-18% in 2024. Moody's adjusted EBITDA margin will remain at 28%-30% over the next 12-18 months.

Analysts note an increase in KTZ cargo turnover (by 5.1% in 2022, by 7.5% in the first nine months of 2023) and believe that it will grow by 7.0% - 9.0% per year in 2023-24, mainly due to transit and export operations.

According to the Agency, as part of the increased role of the Trans-Caspian International Transport Route, demand for rail freight transport will remain at an elevated level and can only be contained by infrastructure bottlenecks.

The rating reflects the company's extensive capital expenditure program to meet strong rail demand and improve its asset base. According to the Agency, capital expenditures for the development of railway infrastructure and renewal of rolling stock increased by 33% in 2022, will more than triple in 2023 and will remain at elevated levels in 2024-2025.

The agency also notes the high importance of the company for the state and its efforts to diversify the economy away from hydrocarbon sectors.

Link to Press Release: https://www.moodys.com/research/Moodys-upgrades-KTZs-rating-to-Baa2-from-Baa3-stable-outlook-Rating-Action--PR_484068.

Press service of JSC «NC«Kazakhstan Temir Zholy»