Riyadh: Tassnief has assigned initial long-term entity rating of “(BB(pi))’’ (Double B unsolicited rating) and a short-term entity rating of “T-5” to Atlas Elevator Company. The ‘BB’ ratings reflect low creditworthiness and high credit risk. risk profile may exhibit wide variation with changes in economic and sector conditions.
The unsolicited ratings, denoted by a ‘pi’ subscript, utilize analytical procedures that are parallel to traditional credit ratings. However, differ in that they are based on public disclosures made available by companies, as well as other secondary sources. The ‘pi’ ratings do not carry an outlook. These ratings are reviewed annually based on the latest financial statements, though an earlier review may occur if a significant event affecting an entity’s credit quality arises. The rated entity has not participated in the unsolicited credit rating, and the rating has not been disclosed to the entity prior to the announcement.
Rating Rationale: The assigned ratings reflects Atlas’ considerable experience in the escalators and elevators business, gained through associated entities operating in foreign markets, as well as its limited-scale operations within the Kingdom. Overall, including foreign operations, Atlas has completed over 15,000 projects, with more than 10,000 contracts currently under maintenance, and a client base exceeding 25,000. Including its foreign operations, it has established partnerships with Hyundai Elevators, Sodimas, Delfar, TK Access Limited, Hidral, PVE and Terry Lifts. Ratings also incorporate a satisfactory governance framework and an experienced management team.
The elevators and escalators industry in Saudi Arabia is expected to witness double digit growth from 2023 to 2029. The key growth drivers of the sector comprise Vision 2030 initiatives (such as smart cities and economic zones), urbanization and population growth, as well as tourism and healthcare projects under Vision 2030. However, Atlas may face several challenges, including the timely execution of ongoing construction projects and the increasing demand for sustainable solutions. Furthermore, its financial risk profile may be constrained by a stagnant revenue trend, despite maintaining good profitability, capitalization profile that is sound in relation to scale of operations and substantial inventory on balance sheet which has constrained the working capital cycle. Specific focus on inventory management is warranted in order to prevent pressure on the liquidity profile of the Company.
Rating Triggers: The addition of new projects to the order book, which supports revenue growth and enhances scale of operations, will serve as a positive rating trigger. Moreover, the company’s ability to reduce volatility in its business and financial risk profile through successful execution of diversification efforts, along with a strong focus on inventory management, will be crucial.
About the Company: Atlas Elevators Company for General Trading and Contracting is a Saudi joint stock company with CR#1010280805 dated January 2010. The Company is engaged in installation, repair and maintenance of escalators and elevators.
For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext. 6627) at +966-112506627 or email at RS@Tassnief.com.
RELATED CRITERIA AND METHODOLOGY
Rating Methodology for Corporate (v.2. 2019) can be found on the website: www.tassnief.com
