Lahore, June 30, 2016 (PPI-OT):The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long-term and short-term entity ratings of HUM Network Limited (HNL) at “A+” (Single A plus) and “A1” (A one) respectively. The outlook on entity ratings is “positive”. The ratings denote a low expectation of credit risk and a strong capacity for timely payment of financial commitments.
The ratings reflect HNL’s strong market position in the domestic media industry. HNL enjoys sound financial profile supported by good coverages and low leveraging – though increased a bit lately. On performance side, stiff competition kept the business margin under check; thus lower profitability. To further strengthen and diversify its revenue stream, HNL is expanding its viewer ship in different geographies. Moreover, HNL is establishing income stream through (i) film distribution under the brand of “HUM Films” and (ii) ancillary domains including publications and holding events.
The management expects improvement in performance as a result of these initiatives. However, these impacted the company’s working capital cycle which witnessed further extension in the recent period. The same was funded through a combination of cash flow from operations and borrowings. The ratings recognize HNL’s experienced management team having sound understanding of the media industry.
The ratings are dependent on the company’s ability to diversify its revenues while perpetuating margins at an adequate level. Meanwhile, any stress on financial profile either by decline in business margins, in turn, weakened operational cash flows or by further material increase in working capital cycle, would affect the ratings. At the same time, upholding governance standards would remain important.
For more information, contact:
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