Karachi, January 19, 2018 (PPI-OT):JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the entity ratings of AKD Securities Limited (AKDSL) at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on August 2, 2016.
Assigned ratings to AKDSL reflect the company’s position as one of the leading brokerage houses in the country with sizeable market share. Ratings also incorporate adequate financial profile and control infrastructure. Moreover, vacancies in the senior management team have been filled by experienced professionals.
Brokerage income has recorded sizeable growth during FY17 on the back of healthy increase in retail commission income. However, brokerage income from foreign clients and domestic institutions has remained stagnant over the last two years. Management plans to sign new partnerships and further increase breadth of research function to grow foreign and institutional business. In line with industry trend, brokerage income has witnessed a dip during 1HFY18 due to decline in market volumes.
Despite the decline in corporate advisory fees, growth in brokerage commissions resulted in higher revenues during FY17. Overall profitability was lower on account of higher provision against doubtful debts. With equity brokerage representing majority of topline, profitability remains dependent on market movements. To augment corporate advisory income two senior resources have been hired during 2017. Given the sizeable mandates in hand, management expects corporate advisory income to depict healthy growth in the ongoing year.
Overdue trade debts have witnessed a noticeable decline on the back of recoveries during FY17; however, the same continues to remain sizeable. Moreover, settlement of related party’ liabilities owed to National Bank of Pakistan have also been noted positively. The company’s sizeable investment in a long term exploration and production company (subsidiary) witnessed a noticeable decline in FY17 due to significant re-measurement adjustment during the period. Resultantly, equity base and loss absorption capacity has witnessed decline.
For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk