Karachi, January 11, 2019 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Haleeb Foods Limited (HFL) at ‘A/A-2’ (Single A/A-Two). The medium to long-term rating of ‘A’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 31, 2017.
HFL is a subsidiary of MEGA Foods (Pvt.) Limited, while the remaining shareholding is vested with the Chaudhry family and others. HFL is one of the major dairy companies operating in the packaged milk and dairy products segment of Pakistan’s dairy industry. The assigned ratings take into account moderate business risk profile of the company, underpinned by positive demand dynamics of the dairy industry, established brand equity in the tea whitener and UHT milk categories and further diversification into new variants of fruit juices and flavoured milk products. The ratings also factor in low financial risk of the company as depicted by low leveraged capital structure and adequate coverages. The liquidity position of HFL is supported by investments in cash and money market mutual funds.
The ratings are constrained by increasing intensity of competition in value-added dairy and challenging operating environment of the organized dairy segment. Moreover, the declining trend in sales and profits was mainly on account of reduced demand for tea whiteners, which is the major sales driver of the company. Meanwhile, effective implementation of strategic initiatives to halt the declining trend in sales remains to be seen in a scenario where increasing pressure of commodity inflation has been witnessed recently due to devaluation of local currency. The ratings will remain dependent on maintenance of debt leverage at prudent levels, profit margins, and sponsors’ support, going forward.
For more information, contact:
Director Compliance and Rating Analytics,
JCR-VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: http://jcrvis.com.pk/