이 기사는 2022년 05월 24일 08:01 thebell 에 표출된 기사입니다.

South Korean credit rating agencies upgraded their credit ratings on Hyundai Rotem on improved financial structure.

Korea Ratings and NICE Investors Service upgraded their ratings on Hyundai Rotem from BBB+ with a positive outlook to A- with a stable outlook. Korea Investors Service revised up a short-term credit rating on the company from A3+ to A2-.

The company’s credit rating was downgraded to BBB+ three years ago due to weak profitability. The domestic agencies retained their ratings at A+ until the end of 2015, but downgraded them to A- in 2019 and to BBB+ in 2020.

In the first half of 2021, they revised up Hyundai Rotem’s outlook from a stable to a positive. This was attributable to the company’s efforts to focus more on the profitmaking defense unit and reduce reliance on the plant business.

Market insiders expect the company’s revenue to continue growing in the longer term thanks to large order backlog and new orders. Hyundai Rotem’s order backlog amounted to some 10 trillion won ($7.9 billion) as of the end of March, winning new orders worth 3 trillion won per year.

The railroad business also got back on track. Hyundai Rotem recorded revenue of 2.87 trillion won in 2021 on a consolidated basis, up 3.1% from a year ago. Its revenue increased by 3.7% year-over-year to 677.4 billion won in the first quarter of this year.

Hyundai Rotem has carried out its self-rescue measures since 2020. It sold some of its land in Uiwang, Gyeonggi Province, to Hyundai Mobis for 87.8 billion won and secured 81.2 billion won by selling its entire stake in its subsidiary Green Air to Hyundai Steel. It also increased its capital by 235.4 billion won through a conversion of convertible bonds.

With the latest credit rating upgrade, the company is expected save borrowing costs when raising funds in the future. It issued commercial paper worth 30 billion won on May 12 and 5 billion won on May 16 based on its new credit rating to repay debts. (Reporting by Ji-won Kim)