UzGeoExploration Assigned ‘B’ Rating with Stable Outlook on the Back of State Orders

Tashkent, Uzbekistan (UzDaily.com) — Joint-stock company Uzbek Geological Exploration (UzGeoExploration), a key provider of mining services in Uzbekistan, has been assigned a long-term credit rating of ‘B’ with a Stable outlook. The rating was awarded despite the company’s fully debt-free capital structure, according to S&P Global Ratings.

The company, which operates with a limited range of services and relatively low profitability, reported EBITDA of US$10 million in 2023 on total revenue of US$80 million. UzGeoExploration’s main clients are state-owned enterprises, including the Ministry of Geology and Mining Industry, which accounts for around 25% of revenue, the Navoi Mining and Metallurgical Combine at approximately 54%, and the Almalyk Mining and Metallurgical Combine at about 16%.

Analysts at S&P Global Ratings note that the company’s narrow business profile and limited capacity to generate free operating cash flow constrain its growth potential. Forecast free operating cash flow for 2024–2025 is expected to amount to US$4–5 million, which is less than 40% of adjusted EBITDA.

At the same time, the rating is supported by a stable portfolio of state orders that ensures near-full utilization of production capacity. Highly specialized contracts generate margins of around 10%, while the company’s close ties with the state provide a moderate likelihood of extraordinary support if required.

An upgrade in the rating over the next 12 months is considered unlikely due to the absence of plans to expand operations or diversify activities. A downgrade could occur in the event of weakened liquidity caused by negative cash flow or an increase in working capital needs.

Overall, UzGeoExploration maintains financial stability thanks to state orders and its debt-free structure, but its limited scale of operations and narrow specialization keep the rating at the ‘B’ level.