Salik Secures Strong Credit Ratings from Moody's & Fitch

Salik Company PJSC, the exclusive toll gate operator in Dubai, has achieved a significant milestone by securing strong investment-grade credit ratings from two of the world's leading rating agencies, Moody's and Fitch. This achievement is a testament to Salik's robust financial health, operational efficiency, and strategic market positioning.

Moody's has assigned Salik an 'A3' rating with a stable outlook, highlighting the company's low-risk business profile and its strategic role in Dubai's economic landscape. The rating reflects Salik's consistent traffic growth, minimal capital expenditure requirements, and strong cash flow generation. With a modest financial leverage and a solid liquidity position, Salik is well-equipped to sustain its operations and expand its market presence.

Similarly, Fitch has awarded Salik an 'A-' rating with a stable outlook, emphasizing the company's unique market position as the sole toll gate operator in Dubai and its long-term concession agreement with the Roads and Transport Authority (RTA). This agreement ensures a stable cash flow, further bolstered by Salik's strong ties to the government of Dubai and the emirate's positive economic and demographic trends.

The financial metrics of Salik are impressive, with a net debt/EBITDA ratio of 2.1x as of September 30, 2024, significantly below its debt covenant of 5.0x. The company also reported a free cash flow of AED 1.05 billion for the nine-month period, marking a year-on-year increase of 1.3%, with a free cash flow margin of 64.3%.

His Excellency Mattar Al Tayer, Chairman of the Board of Directors of Salik, expressed confidence in the company's future, citing the positive credit ratings as a reflection of Salik's strong business model and financial resilience. He noted that the ratings validate Salik's unique market position and robust performance, underscoring the company's commitment to maintaining a healthy balance sheet and high cash flow generation.

Given Salik's strategic market position, stable financial metrics, and positive economic outlook in Dubai, the investment-grade ratings from Moody's and Fitch are well-deserved. These ratings not only enhance Salik's credibility in the capital markets but also position the company favorably for future growth opportunities.

In conclusion, the strong credit ratings and Salik's strategic market position suggest a promising future for investors. Therefore, the recommendation is to buy Salik's stock, as it is poised to benefit from its exclusive market position and robust financial health.