PACRA – Page 3 – PPI News Agency

March 24, 2023

PACRA assigns preliminary rating to China Power Hub Generation Company (Private) Limited – PPSTS-3 – PKR 7bln – TBI

Lahore, March 24, 2023 (PPI-OT): The ratings take comfort from the fact that this project is a priority project under CPEC and has significant economic and strategic importance. Presence of a dedicated jetty at the plant site and the Coal Supply Agreement (CSA) with reputable international coal suppliers which ensure the stable performance of the project provides more cushion to the ratings.

Going forward, due to the increase in the international prices of coal the Company is currently in discussion with the GOP for alternate solutions. O and M agreement is with Hub Power Services Ltd. (HPSL) – a joint venture between Hub Power Holdings Limited and China Power International Maintenance Engineering Company Limited.

The Company has announced the Project Completion Date (PCD) on 23rd Feb 2023. CPHGC has also finalized the tariff with NEPRA recently. The Company reported a turnover of PKR 190.6bln during the CY22 (CY21: 100bln) and has attained a bottom line of PKR 46.5bln in CY22 (CY21: 19bln). DSRA is maintained by the company and is funded by internal cash generation.

The company has paid off six instalments of the long-term project-related debt. In reference to short-term borrowings, CPHGC has procured working capital lines of PKR 66.7bln out of which short-term borrowing utilization stood at PKR 44.4bln during CY22.

In order to cater the short-term working capital needs the Company is also in the process of issuance of PPSTS-3 amounting PKR 7bln. Nevertheless, the leverage is still significant and will progressively decrease over the course of the project. Circular debt build-up could make managing cash flow difficult. The management, however, is steadfast in its commitment to maintaining on-time debt repayments and is supported by pertinent business fundamentals.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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March 24, 2023

PACRA maintains Entity Ratings of Halmore Power Generation Company Limited

Lahore, March 24, 2023 (PPI-OT): Halmore Power Generation Company Limited (the Company) is an independent power producer (IPP), operating a Combined Cycle gas turbine plant on a build-own operate (BOO), having gross capacity of 225MW located at Bhikki Sheikhupura. The plant achieved its commercial operations in June 2011 with its PPA valid till Feb’2042.

Mr. Karim Ud Din is the major sponsor of the Company. The Company has an O and M with General Electric and fuel supply agreements with SNGPL and PSO. The ratings of Halmore take comfort by the Power Purchase Agreement signed between Power Purchaser and Halmore which ensure capacity payments as well as guaranteed electricity offtake – given adherence to agreed parameters.

Further, cushion is drawn from low operational risk, a result of established performance credentials of GE – the O and M operator. The required availability for Halmore Power under the PPA is 90%. During the period average plant availability remained in accordance with the agreed parameter. The plant generated 109,863.09 MW of net electrical output for the six-month ended Dec 2022. Net income recorded during 6MFY23 was PKR 1,763mln (6MFY22: PKR 1,096mln, 6MFY21: PKR 1,639mln).

The company successfully paid off its Long-Term project related debt in June 2021 resulting in a favourable impact on its financial risk profile. As on Dec 2022, the debt profile comprises short-term borrowings only, which have been availed to meet working capital requirements, mainly due to delayed payments from the off taker. The Company has equity base of PKR 20,196mln whereas leveraging stands at 38.2% at end 1HFY23.

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March 24, 2023

PACRA Upgrades Stability Rating of Alfalah GHP Income Fund

Lahore, March 24, 2023 (PPI-OT): The rating reflects the adequate risk profile of the Fund’s credit and interest rate risk profile. At the end Dec’22, ~39.4%% of Funds assets were invested in TFC/Sukuk, ~25.7% of funds were exposed to T-Bills, ~16.9% in Banks, ~5.6% in CPs, ~4.9% in PIBs whereas remaining was invested in Others. During CY22, the Fund remained compliant with the credit quality criteria for the assigned rating and had investments, on average ~44% in Govt.

securities which further provides comfort to the assigned rating upgrade. The WAM of the Fund was 748 days, at Dec’22, exposing the fund to credit risk which is manageable due to investment in the Govt. securities. The Duration stood at 72 days, at end Dec 22. The unit holding pattern of the Fund is highly concentrated with top ten investors representing ~81.13% of the Fund’s assets, however, related party exposure is ~43% which is limiting the redemption pressure.

Going forward, the Fund intends to increase exposure in Govt. securities keeping in view the authorized investment allocations and market expectations. Material changes in the Fund’s asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

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March 24, 2023

PACRA Maintains Stability Rating of NBP Islamic Savings Fund

Lahore, March 24, 2023 (PPI-OT): NBP Islamic Savings Fund (or the ‘Fund’) is a medium risk-profile fund. The assigned rating reflects the Fund’s moderate credit and interest rate risk profile emanating from its investment strategy. The Fund had invested ~84% in bank majority in A+ rated bank, ~8.8% in certificates of Musharaka whereas ~5.5% in Short Term Sukuks rated A+ and above and ~1.7% in others at the end Dec’22.

The duration and the WAM of the Fund stood at 6 days at the end Dec’22, limiting the exposure to interest rate and credit risk. The top ten investor concentration stood at ~21.7% at the end Dec’22, giving rise to moderate level of redemption pressure.

Going forward, the Fund intend to diversify their investment in A+ and above rated avenues and will ensure to meet the given criteria within the curing period. Any Material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the ratings.

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March 24, 2023

PACRA Maintains the Entity Ratings of Saif Power Limited

Lahore, March 24, 2023 (PPI-OT):Saif Power Limited (Saif Power) has been established to set up and operate, combined cycle dual fuel, 225 MW net power generation plant, for generation of electricity and onward sale of electricity to the Power Purchaser (CPPA-G).

The plant achieved its commercial operations date (COD) on April 30, 2010. The ratings reflect strong business profile of the Company emanating from the demand risk coverage under 30-year Power Purchase Agreement (PPA) signed between CPPA-G and the Company starting from the COD. Meanwhile, the Implementation Agreement provides sovereign guarantee for cash flows, given adherence to agreed performance benchmarks.

The Company continues to meet its performance benchmarks. Comfort is drawn from General Electric International Inc. (G.E) which is the Operations, Maintenance and Service (O and M) Contractor having both local and international experience in the energy sector.

The primary fuel of the plant is Gas/Regasified Liquefied Natural Gas (RLNG) which is supplied by Sui Northern Gas Pipeline Limited (SNGPL) and HSD is the backup fuel. Thus, fuel supply risk is considered adequate, pertaining to the meaningful addition of RLNG in Pakistan’s fuel mix. During 9MCY22, company generated revenues of PKR ~20,223mln (9MCY21: PKR ~13,010mln) with a Net Income of PKR ~1,494mln (9MCY21: PKR ~1,233mln; CY21: PKR ~1,747mln).

The working capital requirements of the Company are fulfilled through mix of short-term borrowing and deployment of internal cashflows. Currently the Company has arranged working capital lines of PKR ~14.531bln out of which 54% (PKR ~7,813mln) had been utilized as of 9MCY22. Saif Power has successfully paid its project related debt in March’20.

Upholding operational performance in line with agreed performance levels would remain a key rating driver. Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain important. However, the management remains committed to sustain improvement in management of commercial obligations reflected by the timely and fully repayment of project debt.

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March 24, 2023

PACRA Maintains Entity Ratings of Kohinoor Energy Limited

Lahore, March 24, 2023 (PPI-OT): The ratings reflect the strong business profile of Kohinoor Energy Limited (Kohinoor Energy), emanating from the demand risk coverage under the Power Purchase Agreement signed between Power Purchaser and the Company. Meanwhile, the Implementation Agreement provides a sovereign guarantee for cashflows, given adherence to agreed performance benchmarks. Kohinoor Energy continues to meet its availability and efficiency benchmarks – an outcome of technically sound O and M team, robust systems and controls.

The company’s financial risk profile, that has shown improvement in recent past, is largely dependent on repayment behaviour of the power purchaser. As the receivables declined due to payments received from Government under master agreement, the Company’s working capital cycle improved, eventually reducing its reliance on funding from banking lines.

During 6MCY23 the Company has dispatched 168,042 MWH of electricity as compared with 229,118 MWH dispatched during the corresponding period of the previous year. Business risk is considered low exhibited by demand risk coverage under the Power Purchase Agreement signed between power purchaser and the company.

Going forward, we expect the profitability to improve slightly due to increase in capacity payments dictated by corresponding increase in Rupee-dollar parity. However, stress can be witnessed on coverages side driven by hike in exchange rate.

The long-term project debt was completely paid off in 2008; thus, company’s debt position mainly reflects current borrowings secured to bridge the working capital requirements. The ratings continue to take comfort from Kohinoor Energy’s association with Saigol Group.

Although well-managed, in-house O and M activities expose the company to operational risk; thus, upholding strong operational performance in line with agreed performance levels would remain a key driver of the ratings. Meanwhile, sustained profitability and performance levels will also remain critical.

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March 21, 2023

PACRA Updates Entity Ratings of Warble (Private) Limited

Lahore, March 21, 2023 (PPI-OT): Warble (Pvt.) Limited’s rating is underpinned by the consistent support it receives, owing to the synergistic benefits from the Group. The Company’s prudent decision‐making framework, in tandem with its healthy top line, is reflected in the entity’s ratings. Further, operational synergies have led to increased margins and augmented profitability. Warble primarily engages in the production and sale of three different segments of agri‐based products, namely I) Pesticides ii) Fertilizers iii) Seeds. While the raw materials for pesticides are essentially procured predominantly from China and Europe while raw material for fertilizers is procured locally.

The Company maintains a well‐integrated network of over 750 franchises spread across the country. Moreover, in lieu of relying heavily on imported products, the Company expanded its product portfolio by incorporating locally produced biofertilizers that are a cost-effective and efficient substitute for urea and DAP-based fertilizers. Additionally, the Company is diversifying its revenue stream in the construction business through group owned company (i.e., Warble Constructions).

The revision in short-term rating factors in the improvement in liquidity position and debt coverage indicators of the company during FY22. Further, the ratings continue to derive strength from the long‐standing experience of the sponsors in the pesticides industry, its established track record of operations and strong competitive position of its diversified products in the country.

Pakistan’s agriculture sector suffered massive losses as surplus rains and floods have devastated major crops. However, the Company was able to mitigate this risk on account of an efficient procurement strategy. The ratings, however, remain constrained by the fluctuations in raw material prices owing to PKR depreciation and fragmented and competitive nature of the pesticide industry.

The ratings assigned to Warble take into account a moderate business risk profile; the sponsor strength emanates from Allahdin Group’s vast and prolonged business interests in fertilizers, pesticides and other commodities. Going forward, ratings remain sensitive to the achievement of projected revenues, maintenance of debt servicing ability and enhancement in coverages.

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