JCR Eurasia Rating has evaluated İnanlar İnşaat A.Ş.and the Planned Bond Issues in an investment grade category and upgraded the Long Term National Local Rating to ‘BBB (Trk)’ from ‘BBB-(Trk)’ along with “Stable” outlooks while affirming its Long Term Int

JCR Eurasia Rating, by assessing “İnanlar İnşaat A.Ş.” within investment grade, has upgraded its credit rating to ‘BBB (Trk)’ from ‘BBB- (Trk)’ on the Long Term National Scale along with ‘Stable’ outlooks for all notes. The Long Term International Foreign and Local Currency ratings were affirmed at ‘BBB-’. Other notes and details of the ratings are given in the table below:

Long Term International Foreign Currency

:

BBB- /(Stable Outlook)

Long Term International Local Currency

:

BBB- /(Stable Outlook)

Long Term National Local Rating

:

BBB (Trk) /(Stable Outlook)

Short Term International Foreign Currency

:

A-3 /(Stable Outlook)

Short Term International Local Currency

:

A-3 /(Stable Outlook)

Short Term National Local Rating

:

A-3 (Trk)/(Stable Outlook)

Sponsor Support

:

2

Stand Alone

:

B

“İnanlar İnşaat A.Ş.”, with roots dating back to the year 1965, has turned into one of the most well-known players in the Turkish Construction Sector with projects including all aspects of development from the architecture, construction and production stages to the turnkey phase. Under the intense competition of the construction industry, the Company has developed lucrative investment opportunities through high-value projects such as the “Terrace” concept completed with high quality materials and modern construction techniques. The Company has built many remarkable projects such as Terrace Fulya, Avlu 138, Terrace Bahçe, Terrace Feri, Asl’I Bahçe. In the recent period, the Company has developed large scale mixed use real estate development projects such as Terrace Tema and Terrace Mix, reinforcing the brand image and the Company’s motto “Design for human beings”. İnanlar İnşaat undertook the role of authorized seller and service supplier of Renault and Dacia automotive in 2013 and of Hyundai and Karsan in 2015. The Company aims to diversify its revenue generation by combining the externalities of construction and automobile sector and carries out sales and marketing operations with an experienced workforce in Istanbul.

İnanlar İnşaat aims to maintain its rapid growth through new projects and effective sales in Istanbul, thus increasing its market share and improving its brand value. The Company’s competent domestic and international sales & marketing network substantially increased its sales volume in 2014 thanks to ongoing prestigious projects and generated considerable amounts of resources and liquidity. The sales trend was sustained in the first half of 2015 owing to the demand from domestic and foreign investors. The Company funds its expanding operations via advances from the sales of its ongoing projects and increasingly utilizes external resources. Although the financial debt of the Company increased modestly, the long-term nature of a considerable part of its financial liabilities eases liquidity management.

Although the increasing cost of land and the negative effect of the devaluation of the Turkish lira on construction costs exerted downward pressure on the operating profitability along with the uncertainty about the housing demand, the Company’s profitability ratios continued to follow a positive trend. Aside from the noteworthy increase in sales volume in 2014, high cash flow generation capacity from ongoing projects, pioneer profile in the housing projects, large scale projects located largely in upcoming districts, strong brand image, positive net working capital, prevalence of its long term resources, access to funding channels and flexibility in liquidity management stemming from the planned bond issuance are the fundamental factors underlying the one-notch upgrade of the Company’s Long Term National Grade to BBB (Trk).

While JCR Eurasia Rating does not possess the necessary capabilities to assess the personal financial strength of Serdar İnan, the Company’s controlling shareholder, it has reached the opinion that they have the willingness to supply long-term liquidity and equity as well as lending effective operational support to the Company should such a need arise taking into account its prestigious position and long-term growth potential in the sector. As such, the Company’s Sponsor Support grade has been assigned as (2) on JCR Eurasia Rating’s notation scale, denoting an adequate level.

On the other hand, regardless of the support from its shareholders, taking into account the Company’s asset size, equity level, growth rates, rising profitability indicators, asset quality, market diversity, strong brand image, privileged position in the sector, organizational improvement and ongoing project volume, the Company has reached a level of experience to manage the incurred risks on its balance sheet provided that the effectiveness in the market is preserved along with the maintenance of current macro-economic conditions. In the light of such circumstances, the Stand Alone grade of the Company has been assigned as (B) on JCR Eurasia Rating’s notation system, denoting an adequate level.

For more information related to the rating results you may visit our internet site http://www.jcrer.com.tr or contact our analyst Mr.Bora Pakyürek.

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