The credit rating of «TECHNO Leasing», L.L.C. (hereinafter, TECHNO Leasing, or the Company) reflects the moderate business profile, adequate capital adequacy, strong risk profile, and satisfactory funding and liquidity assessments.
TECHNO Leasing is a versatile leasing company that focuses on financial leasing of motor vehicles, road construction machinery, and equipment for small and medium-sized businesses and operates in the Central Federal District.
KEY ASSESSMENT FACTORS
Moderate business profile assessment. The business profile assessment has remained unchanged since last year, although ACRA notes that the Company’s lease portfolio has grown. Over the 12 months preceding September 30, 2022, the portfolio expanded by 1.3 times to RUB 3,504 mln. The volume of new business for 9M 2022 is practically equal to the same period last year, however, it did not have such a significant impact on the volume of the lease portfolio due to a large number of early repurchases of leased property by counterparties. Passenger vehicles and trucks account for 50% of the portfolio, while the share of road construction vehicles and special equipment is 31%. ACRA assesses the liquidity of assets leased by the Company as above medium. The Agency notes that the Company controls the level of client base diversification: as of September 30, 2022, the Company’s largest client accounted for around 4% of the lease portfolio, while the 10 largest clients accounted for 28% (36% a year earlier). The quality of corporate governance and risk management remains adequate, which is confirmed by the historic low volume of overdue lease payments, and business profitability.
Adequate capital adequacy assessment. The capital adequacy ratio (CAR) was 9.8% as of September 30, 2022, taking into account the impact of new reporting requirements, according to which the recognition of part of income actually received by the Company will be reflected in future periods. The averaged capital generation ratio (ACGR) remains medium (as of September 30, 2022 it was 97 bps). ACRA maintains its adequate assessment of capital adequacy, but notes that further decline of the CAR due to fast growth of business amid low profitability may lead to deterioration of the capital adequacy assessment in the future.
Strong risk profile assessment. ACRA assesses the quality of the Company’s lease portfolio as high. TECHNO Leasing maintains a low volume of overdue payables in the portfolio — as of September 30, 2022, the share of lease payments overdue for 90+ days was less than 0.5% of the lease portfolio. The analysis of the lease portfolio carried by ACRA showed that potentially problem leases do not exceed 5% of total expected lease payments. ACRA sees no material market or operational risks facing TECHNO Leasing’s business, which results in the strong risk profile assessment.
Satisfactory funding and liquidity assessment. The Company’s funding structure is moderately diversified. The Company raises funds from two main sources: debt securities (37% of the balance sheet total as of September 30, 2022) and bank loans (45%). The share of internal funding has continued to decline due to the outrunning growth of assets. The share of the largest bank lender continued to stand at 9% of all liabilities as of September 30, 2022. ACRA notes that concentration on the five largest bank lenders has declined to 22% of liabilities due to further diversification of the loan portfolio.
The liquidity position is satisfactory due to a moderately high value of the forecasted current liquidity ratio over the 12 to 24-month horizon — about 1.15 in ACRA’s base case scenario (including the Company’s plans for new business growth and current contracts), which indicates positive cash flow in the analyzed period. The Company does not have any significant one-time debt repayments planned for the next 12 to 24 months. The need to raise emergency liquidity is insignificant in the stress scenario. At the same time, ACRA notes that the Company does not have any reliable sources of emergency liquidity.
key assumptions
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Maintaining the current business model within the 12 to 18-month horizon;
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Share of potentially problem lessees in the lease portfolio below 5%.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
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Significant strengthening of the Company’s market positions;
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Considerable improvement of capital generation capacity.
A negative rating action may be prompted by:
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Decline of the capital adequacy ratio and/or the Company’s capital generation capacity;
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Lower quality of the lease portfolio;
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Significant deterioration of liquidity position.
rating components
Standalone creditworthiness assessment (SCA): bbb-.
Adjustments: none.
Support: none.
issue ratings
No outstanding issues have been rated.
regulatory disclosure
The credit rating has been assigned to «TECHNO Leasing», L.L.C. under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Leasing Companies on the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The credit rating of «TECHNO Leasing», L.L.C. was published by ACRA for the first time on December 27, 2019. The credit rating and its outlook are expected to be revised within one year following the publication date of this press release.
The credit rating was assigned based on data provided by «TECHNO Leasing», L.L.C., information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the RAS financial statements of «TECHNO Leasing», L.L.C. The credit rating is solicited and «TECHNO Leasing», L.L.C. participated in its assignment.
In assigning the credit rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to «TECHNO Leasing», L.L.C. No conflicts of interest were discovered in the course of credit rating assignment.
