Lahore, May 21, 2019 (PPI-OT): The ratings reflect Pakistan Services Limited’s (The Company) strong position in the hospitality industry as the market leader drawing comfort from its association with Hashoo Group. Pakistan Services Limited has witnessed growth over the years (in line with Industry dynamics) amid improving security conditions and progression of CPEC with stable margins.
However, ongoing geopolitical scenario coupled with slowdown in domestic economic activity has impacted the Company’s revenues and profitability through 9MFY19. The Company has taken cost control measures to improve margins, however, a significant impact is yet to be seen. The Company has modest leveraging and a large asset base. Relatively higher borrowings and rising interest rates have put coverages under pressure.
This trend is expected to continue as cashflows may remain suppressed till new properties commence operations. The management intends to dispose off some of its properties (real estate assets) to supplement its liquidity. The Company has liquid investments and cash to meet its obligations and maintaining this liquidity cushion will be important.
Ratings are dependent on effective implementation of envisaged strategy while maintaining modest leveraging and strengthening coverages. Any significant delay in commencement of new projects and/or further deterioration in margins leading to lower coverages and liquidity will have a negative impact on ratings. Meanwhile, maintaining sufficient liquidity for debt repayment remains critical.
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