BAKU, Azerbaijan, June 9
By Tamilla Mammadova – Trend:
Economic rebound in the region to positively affect Georgian Railway's (GR’s) performance in 2021 and going forward, Trend reports via the Galt & Taggart investment bank.
"We estimate transportation volumes to increase at 5 percent in 2021, before growing by 10 percent and 12 percent in 2022-2023 as the new Baku-Tbilisi-Kars (BTK) line will attract additional cargoes," the report said.
As reported, the Baku-Tbilisi-Kars railway which remains in the test regime is expected to be completed in 2022. The BTK line has the potential to bring in significant cargo flows for GR, particularly Chinese products going to Turkey and Europe.
The initial capacity of the railway is 5 million tons annually, with the potential to increase up to 15 million tons. Furthermore, the mainline modernization project, which is expected to be completed by 2023 will increase the efficiency of the Georgian rail corridor by increasing the average speed of freight trains from 60 km/h to 80 km/h and ultimately result in a 78 percent increase in transportation capacity and decrease in operating costs by 10 percent by 2022.
"We forecast 2021 EBITDA to stand at $70.5 million, translating into an EBIDTA margin of 45.6 percent (vs. 44.7 percent in 2020). We forecast lari’s further depreciation in 2021 (at $3.24 in 2021 per our forecast) to positively affect the company’s profitability as most of the expenses are lari denominated. We forecast a slight decline in the top line in 2021, however from 2022 we forecast a gradual rebound in the revenue as the BTK line will become fully operational and the finalization of the modernization project will increase the company’s efficiency," the report said.
On May 26, Georgian Railway announced the tender offer on its outstanding $500 million, 7.75 percent, Eurobond maturing in 2022. The company offers a 107.5 percent price on the tender, which includes a 2.25 percent early redemption premium.
---
Follow the author on Twitter: @Mila6197935