Moody’s Investors Service has upgraded the rating of the national railway company Kazakhstan Temir Zholy (KTZ). The upgrade from Baa3 to Baa2 reflects the sustained improvement in KTZ’s operating and financial performance coupled with improved credit metrics.
KTZ demonstrated significant revenue growth and high profitability: revenue growth was 13% in 2021, 16% in 2022 and 26% in the first nine months of 2023. Analysts expect further revenue growth of 15-18% in 2024. And Moody’s expects adjusted EBITDA margin to remain at 28%-30% over the next 12-18 months.
The growth in KTZ cargo turnover is also noteworthy: by 5.1% in 2022 and by 7.5% in the first nine months of 2023. Due to transit and export operations, cargo turnover is projected to increase by approximately 7.0%-9.0% per year.
The rating upgrade reflects KTZ’s large capital expenditure program aimed at meeting high demand for rail transportation and improving asset infrastructure. Capital expenditure on railway infrastructure development and fleet renewal increased by 33% in 2022, is expected to more than triple in 2023 and remain high in 2024-2025.
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