How a National Railway Is Becoming a Regional Logistics Hub

Kazakhstan Temir Zholy JSC is navigating one of the most pivotal stages in its corporate history: the transition from large-scale infrastructure investment to a phase of monetisation and growing operating cash flow. The country’s national railway is evolving into a major logistics hub for the broader region, with KTZ repositioning itself from a conventional carrier into a fully integrated transport platform. How does the company’s new strategy drive revenue growth, attract capital for large-scale projects, and generate returns on existing assets? We spoke with Assel Tolegen, Director of the Corporate Finance Department at Teniz Capital Investment Banking, about the evolution of Kazakhstan Temir Zholy’s investment narrative and the key factors shaping its financial performance today.

How is KTZ’s business model transforming?

— Kazakhstan’s national railway operator and one of the country’s largest infrastructure holding companies — plays a central role in ensuring the economy’s transport connectivity. In recent years, the company has undertaken a consistent structural optimisation: between 2019 and 2024, approximately 30 entities were divested from the group perimeter, while the holding currently consolidates around 45 organisations. In parallel with this rationalisation, the company has been expanding its logistics model, advancing toward a multimodal platform and broader business diversification. Against this backdrop, the company is completing a major investment cycle and entering a phase where extracting value from already-built infrastructure becomes the defining priority.

Is this already reflected in the financial results?

— The 2025 financial results demonstrate meaningful improvement across all key metrics. Total revenue grew to KZT 2.76 trillion, up from KZT 2.16 trillion in the prior year. Freight transportation remained the primary revenue driver at KZT 2.46 trillion, reflecting a significant uptick in rail demand from industrial clients and exporters. Profitability improved substantially: gross profit reached KZT 833 billion, operating profit KZT 499 billion, and net profit KZT 344 billion — more than doubling year-on-year. EBITDA is estimated at KZT 1.0-1.2 trillion, confirming the growth in operating cash flow. Balance sheet indicators equally reflect the scale of the investment programme completed: total assets reached KZT 7.6 trillion, up from KZT 6.0 trillion a year earlier, with fixed assets increasing to KZT 5.9 trillion.

What factors are driving this growth?

— The primary growth driver remains the expansion of transit freight. Kazakhstan is reinforcing its position along the China — Europe corridor and within the TITR (Trans-Caspian International Transport Route). The anticipated increase in transit flows between China, Southeast Asia, and Europe from mid-2026 is expected to provide an additional boost to freight volumes. During 2025, a number of container logistics projects were executed, including participation in the development of an international container hub in Aktau and the formation of joint ventures with Chinese partners.

Also noteworthy is the development of the company’s operational base. KTZ maintains strong partnerships with major industrial clients — its collaboration with Qarmet, for instance, generates stable monthly freight volumes of approximately 300,000 tonnes. This partnership is strategic in nature, encompassing coordinated raw material supply to the plant, export of finished products, and the implementation of digital solutions to accelerate wagon turnaround. This approach serves to enhance the export competitiveness of Kazakhstan’s steel industry in global markets. Overall, the revenue base remains predominantly domestic (KZT 2.64 trillion), while the international segment continues to grow in scale and importance.

How does the market assess the company’s debt profile?

— KTZ has registered a $3 billion bond programme, reflecting the company’s long-term ambitions and strategic planning horizon. In the near term, the company intends to issue $1 billion in bonds with 5- and 10-year maturities. Market participants broadly view KTZ’s debt obligations as justified and manageable — capital-intensive infrastructure assets such as railways inherently require substantial long-term financing, including track maintenance and rolling stock renewal. The key credit metric for analysts is earnings growth: KTZ’s revenues are expanding faster than its debt, providing sufficient capacity to service obligations on schedule. The fact that profits are being reinvested into development rather than distributed as dividends reinforces the company’s commitment to long-term operational stability. Overall, KTZ’s leverage is assessed as manageable, with a net debt/EBITDA ratio of 3,69x considered appropriate for infrastructure-sector peers, while earnings growth supports continued debt serviceability. The current development phase is characterised by large-scale modernisation, rolling stock renewal, and the expansion of Kazakhstan’s transit potential.

How would you characterise KTZ’s current stage of development?

— The company has entered a phase in which the infrastructure already built is beginning to generate meaningful returns. Combined with growing transit flows, an expanding portfolio of logistics services, and strong government support, this underpins an increasingly resilient business model. KTZ’s financial stability is further evidenced by its credit ratings from leading international agencies — Moody’s and Fitch Ratings — as well as the continued confidence of international financial institutions providing the company with credit facilities. In addition, in late December 2025, S&P Global revised KTZ’s ESG score upward by five points to 75. In summary, KTZ is gradually transforming from a capital-intensive infrastructure project into an asset with growing operating cash flow and strong potential for further improvement in financial performance.