Lahore, March 29, 2018 (PPI-OT): Pakistan Services Limited (PSL) is the owner and operator of Pearl Continental (PC) Hotels in Pakistan. PC is the premium five star hotel chain of the country. The rating reflects the leading position of the PC brand in the domestic market alongwith a diversified geographical presence of PSL providing competitive edge over other players. PSL currently has presence in six major cities. The rating also incorporates the association of PSL with the Hashoo group – market leader in the domestic hospitality market with over 2500 rooms in 20 properties. To solidify its market position, PSL is constructing five star hotels in Multan and Mirpur, later will be partially financed through this Sukuk.
PSL has observed continuous growth in occupancies and ADRs – facet of improved security situation and increased economic activity in the country. PC – Lahore is the biggest hotel with 607 rooms contributing ~45% of the overall revenue stream. The profitability trend also observed improvement. The company currently has a low leveraged capital structure but debt driven expansions would increase the company’s leveraging though remaining at a comfortable level. PSL intends to maintain a debt payment account for servicing its financial obligations. To ensure liquidity cushion the company plans to maintain a cushion in its short term lines equivalent to the upcoming instalment amount, which further provides comfort to the ratings.
In order to capitalize on the increasing demand in the hospitality sector, PSL targets sizeable investments in expansion and development of new properties in both high-end and mid-tier segments. The company also plans to enter into the real estate housing and mega mall projects through its subsidiaries. Management of coverages amidst rising debt levels would remain crucial. Timely completion of under construction properties improving the cashflow stream would provide support to the coverages.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com