{"id":9481,"date":"2012-03-30T15:41:34","date_gmt":"2012-03-30T13:41:34","guid":{"rendered":"http:\/\/www.myza.co.za\/03\/text-sp-summary-eqstra-holdings-ltd\/"},"modified":"2012-03-30T15:41:34","modified_gmt":"2012-03-30T13:41:34","slug":"text-sp-summary-eqstra-holdings-ltd","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/text-sp-summary-eqstra-holdings-ltd\/","title":{"rendered":"TEXT-S&P summary: Eqstra Holdings Ltd."},"content":{"rendered":"

\t\t<\/span><\/p>\n

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Eqstra is a nonoperational holding company; however, the ratings are the same
\nas those on the group as there is no structural subordination, and also due to
\nrevenue diversity from the operating group and limited regulation.<\/p>\n

<\/span><\/p>\n

Eqstra is a South Africa-based operating lease specialist, with total assets
\nof South African rand (ZAR) 12.03 billion ($1.5 billion at ZAR8.08 to $1) at
\nDec. 31, 2011. Compared with many specialist lenders limited to a particular
\ngeographic area, Eqstra’s business diversification and franchise stability are
\ngood, in our opinion. The contribution from international subsidiaries has
\nincreased significantly throughout 2011. Nondomestic operations accounted for
\n18% of operating assets and 17% of operating profits in the first half of
\nfiscal 2012. Operational assets and revenues are spread across the Passenger
\nCommercial Vehicle (PCV) leasing, Industrial Equipment leasing (IE), Contract
\nMining and Plant Rental, (CM), and Construction and Mining Equipment
\nDistributorships (CMED) business lines. Eqstra holds a leading domestic market
\nposition in the first three of these business units.<\/p>\n

<\/span><\/p>\n

Strong asset quality, supported by high intrinsic collateralization and what
\nwe consider to be capable risk management support the ratings on Eqstra. The
\ncost of risk (loan loss provisions to average lease receivables) has performed
\nstrongly over the past two years and reached over 0.69% at Dec. 31, 2011. We
\nunderstand that all exposures for trade receivables that are 90 days overdue
\nare fully provided for (trade receivables are typically short-term financial
\nobligations of the debtors as per lease contractors). Recovery prospects are
\ngood, in our view, given the intrinsically high collateral levels and the
\ncompany’s ability to move leased assets away from one lessee to another if
\nthere is a payment delay.<\/p>\n

<\/span><\/p>\n

We view Eqstra’s capitalization as good and consider that it remains a
\npositive rating factor. Capital adequacy (total equity to assets) deteriorated
\nto 23% at Dec. 31, 2011, from 26.3% one year earlier–still comfortably above
\nEqstra’s funding covenant guideline of 20%. Eqstra’s profitability continued
\nto improve in 2011, with return on assets increasing to 3.5% at Dec. 31, 2011.
\nThe increase in profitability reflected an 11% year-on-year revenue increase
\nand flat real operating cost growth. As a result, the EBITDA margin improved
\nto 33% during the first half of 2012, the highest in three years. In the short
\nterm, we expect profits to continue rising following the successful completion
\nof the Bucyrus distribution agreement sale, which will provide some goodwill
\nprofit. In our view, the company’s opencast mining project in Mozambique
\n(Benga) will provide a greater proportion of revenues.<\/p>\n

<\/span><\/p>\n

Eqstra’s funding and liquidity matrices deteriorated somewhat in the 12 months
\nto Dec. 31, 2011, mainly due to strong capital expenditure as a result of the
\nquick growth of leased assets at the Benga project. However, we expect that
\nthe Bucyrus distribution agreement sale will remove inventory and provide some
\ngoodwill, which the company will use to pay down debt. We also factor into our
\nratings an expectation that revenues from the Benga project will reduce total
\ndebt as a percentage of revenues and cash flow going forward. Cash flow from
\noperations remains the most significant source of liquidity for Eqstra, as the
\ncompany doesn’t hold a cash cushion for liquidity management purposes. At Dec.
\n31, 2011, funds from operations deteriorated to 33% of net debt; free
\noperating cash flow as capital expenditure (in which we include acquisition of
\nleasing assets) was strong throughout the first half.<\/p>\n

<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Eqstra is a nonoperational holding company; however, the ratings are the same as those on the group as there is no structural subordination, and also due to revenue diversity from the operating group and limited regulation. Eqstra is a South Africa-based operating lease specialist, with total assets of South African rand (ZAR) 12.03 billion ($1.5 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[830,2370,183],"class_list":{"0":"post-9481","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-south-africa","7":"tag-news","8":"tag-reuters","9":"tag-south-africa-2","10":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/9481","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=9481"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/9481\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=9481"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=9481"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=9481"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}