Corporate Credit Rating 2021 for NEWATT S.R.L. (Affirm)

modefinance published the Solicited Corporate Credit Rating of NEWATT S.R.L. on the CRA website and the rating assigned to the entity is A3- (Affirm). The analysis revealed it is a good company with good capability of repaying financial obligations and low dependence on possible adverse macroeconomic conditions.

NEWATT S.R.L. was founded in 2015 as a company active in the energy sector, within which it operates as a supply chain partner for small Italian resellers and energy operators, concentrating its operations in Nothern Italy. The Italian energy market has undergone a particular mutation over the last few years. Although the number of large integrated operators has remained stable, the number of small reseller operators (< 100 GWh/year) has grown. The latter type of operators, due to the small size that characterizes them, is cost-efficient, rooted in the territory, and with a loyal customer portfolio, but it lacks in risks management (mainly operational and market), thus being extremely vulnerable to sector dynamics. As a supply chain partner, NEWATT S.R.L. supports small resellers through: Supply Chain management services (Supply, Balancing and Portfolio management); Distribution, Transport and Dispatching Management; Access to regulated markets and over-the counter markets. 

The company NEWATT S.R.L. confirms an “adequate” economic and financial situation, characterized by profitability that remains solid during the year and an adequate financial balance. In addition to this, there is an increasing leverage indicator, but still enough to show the Company’s proper capitalization.

An analysis of cash flows shows that the Company recorded a substantial amount of cash resources generated by operations, which in turn was well supported by growth in trade payables. In addition to this, there are also the resources collected from the financial system, which can fully cover the investments made. The analysis of the Bank of Italy’s Central Credit Register confirms the proper management of the credit lines granted to the Company.

The group structure is confirmed to be elementary, although the Company has recently established two new subsidiaries. The administrative body is confirmed to have a collegial form, with operations subject to the control of a single body auditor. The Company was established in 2015, and over the years the management has continued to pursue an appreciable growth path that, in addition to the increase in share capital, has led to the establishment of the mentioned subsidiaries. Still, there are no black records to be found in the Company, shareholders or members of the governing body.

As far as size is concerned, the Company has a very high ranking which shows how it is one of the largest companies in the entire sample in terms of turnover. Regarding solvency, the Company expresses a positioning well above the industry median, which can be considered good and such as to confirm the company's appreciable capitalization. Finally, looking at profitability, the Company manifests a positioning above the industry median and to be considered largely adequate. The peer group expresses an overall constant leverage throughout the period under review and such that it can be considered hardly sufficient, while the financial leverage of the sector is consistently adequate. The peer group expresses liquidity indicators above unity such that they can be considered adequate. The peer group expresses a shrinking ROE during 2020, but such that it can be considered adequate.

The energy sector in Italy is of considerable strategic importance that has undergone a radical transformation in recent years, with the use of coal gradually declining in favor of the greater use of renewable energy. This objective, however, clashes with recent geopolitical tensions and the need for the Italian Government to look for alternative sources of supply. Within this framework, electricity consumption is expected to decline over the next few years. The abolition of the greater protection market will also broaden the pool of potential customers, although the granularity of the sector is an important barrier to entry. The macroeconomic picture for Italy shows that the recovery in 2021 has on the whole met forecasts, with sustained economic growth that could be confirmed in the coming years. However, recent geopolitical tensions undermine the forecasts, especially in terms of maintaining adequate economic growth, with domestic consumption likely to be affected by rising inflation. The 2022 forecast figures are therefore likely to be revised downward.

In the following table, the addressing factors, actions or events that could lead to an upgrade or a downgrade are summarized:

The present Corporate Credit rating is issued by modefinance under EU Regulation N. 1060/2009 and following amendments.

The present rating is solicited, and based on both private and public information. The rated entity and/or related third parties have provided all private information used. modefinance had access to some accounts and other relevant internal documents of the rated entity and/or related third parties. Solicited and unsolicited ratings issued by modefinance are of comparable quality, as the solicitation status has no effect on methodologies used. More comprehensive information on modefinance Corporate Credit Ratings are available here.

The present Corporate Credit Rating is issued on MORE Methodology 2.0 and Rating Methodology 1.0. A comprehensive description of both methodologies, as well as information on modefinance Rating Scale and Mappings, is available here. For information on historical default rates of modefinance Corporate Credit Ratings please refer to ESMA Central Repository and ESMA European Rating Platform.

modefinance refers to default as a company under bankruptcy, or under liquidation status, or under administration or for which missed payments on a financial obligation are officially recorded.

The quality of the information available on the rated entity and used to determine the present rating was judged by modefinance as satisfactory. Please note that modefinance does not perform any audit activity and is not in a position to guarantee the accuracy of any information used and/or reported in the present document. As such, modefinance can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

The present credit rating was notified to the rated entity in order to identify potential factual errors, as prescribed by the CRA Regulation. No amendments were applied after the notification process.

The rated entity is not a buyer of ancillary services provided by modefinance (credit risk software). The rating action issued by modefinance was performed independently. The analysts, members of the rating team involved in the process, modefinance Srl and its members and shareholders do not have any conflicts of interest in relation to the Rated Entity and/or Related Third Parties. If in the future a potential conflict of interest is identified in relation to the persons reported above, modefinance Ratings will provide the appropriate information and if necessary the rating will be withdrawn.

The present Credit Rating is an opinion of the general creditworthiness that modefinance issues on the rated entity, and should be relied upon to a limited degree. The issued rating is subject to an ongoing monitoring until withdrawal.

Head Analyst – Christian Raimondo (Rating Analyst)
christian.raimondo@modefinance.com
+39 040 3756740

Assistant Analyst – Stefano Chirsich (Rating Analyst)
stefano.chirsich@modefinance.com
+39 040 3756740

Responsible for Rating Approval – Pinar Dilek
pinar.dilek@modefinance.com
+39 040 3756740