PACRA – Page 81 – PPI News Agency

March 2, 2018

PACRA assigns initial Broker Management Rating to EFG Hermes Pakistan Limited

Lahore, March 02, 2018 (PPI-OT): Broker Management Rating of EFG Hermes Pakistan Limited represents its emerging position in the country’s brokerage industry. Growing market share, matrix reporting organizational structure, experienced top management are the key traits of the company.

EFG has well developed organizational structure which requires senior management to report to their respective heads within the group and it’s a first brokerage company whose foreign sales team operates from UAE office. The research department is in alliance with EFG group, and the company emphasizes on providing quality services to its clients by providing market reports in a systematic way. The IT infrastructure allows full integration of the front and back office; able to generate real time reports. Company also has online trading terminal with updated trading features and tools. Meanwhile, mobile app is developed, tested and yet to be launch.

Lately, company has achieved breakeven and plans to capture sizeable market share by focusing more on local institutional. Retail penetration needs improvement. The rating demonstrates company’s new approach to keep market risk low. This mainly devised after the acquisition by EFG group, company prohibits proprietary trading and investment in the market. Moreover, strong management control and governance framework, and strong revenue growth – volume and value – would intensify its emerging position in the industry.

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

February 28, 2018

PACRA Initial Entity Ratings of Honda Centre (Private) Limited

Lahore, February 28, 2018 (PPI-OT): Car dealership (authorized) rides on the strength of the Principal (auto manufacturer/assembler). The stronger the Principal in the respective market, higher is the standing of the car dealer. There is a pre-defined set of criteria – qualitative and quantitative – that the Principal demands of the dealer network. The rating takes comfort from Honda Centres’ alliance to Honda Atlas Cars Pakistan Limited– owned by Atlas Group and Honda Motor Company Limited, Japan. Honda Centre is one of the largest authorized 3S dealership for Honda Atlas Cars Pakistan Limited in Pakistan. Honda Centre (Pvt) Limited (HC) has been in the auto dealership industry for over a decade now.

The sponsors have a good understanding of the business. The company’s profitability and leveraging is good. The sponsors have injected a sizeable amount as subordinated debt. The overall auto sector business is dependent on economic indicators and demand led by businesses and investors. Honda Centre has built a sustainable position in the competitive auto industry of Pakistan. The volumes are rising. Honda Centre has captured adequate market share over a decade of operations.

It is important to sustain the growth while managing the rising competition, which is more of a Principal’s domain. Foreign players are also taking interest in the local market. Control environment may be strengthened by including independent directorship and adopting quarterly accounts. The ratings are dependent on sustaining a steady revenue stream and financial risk profile. Any prolonged downturn in subdued business volume can have a detrimental effect on the rating. Good corporate governance practice is considered pivotal for a growing business concern.

February 28, 2018

PACRA Assigns Initial Entity Ratings to Toyota Jinnah Motors (Private) Limited

Lahore, February 28, 2018 (PPI-OT): Car dealership (authorized) rides on the strength of the principal (auto manufacturer/assembler). The stronger the principal in the respective market, higher the standing of the car dealer is. There is a pre-defined set of criteria – qualitative and quantitative – that the principal imposes on the dealer’s network. The rating takes comfort from Toyota Jinnah’s alliance to Indus Motor Company – owned by Habib Group, Toyota Motor Corporation and Toyota Tsusho Corporation. Toyota Jinnah Motors (TJM) operates as 3S car dealership.

Toyota Jinnah has built a sustainable position in the competitive industry of Pakistan. The volumes are rising. Toyota Jinnah Motors has captured adequate market share in early year of operations. It is important to sustain the growth while managing the rising competition, which is more of the principal’s domain. Foreign players are also taking interest in the local market. The financial risk profile of Toyota Jinnah Motors is adequate.

The company intends not to raise any long term debt borrowing in future. Going forward, strong growth in auto sector amidst improving macro-economic conditions is expected to result in robust consumer demand. Toyota Jinnah Motors is poised to take full advantage. The ratings are dependent on the management’s ability to sustain its business profile while benefiting from positive demand fundamentals; financial discipline/transparency is crucial. Moreover, strengthening of governance framework is pivotal for any growing business concern.

February 27, 2018

PACRA Upgrades Entity Ratings of Engro Elengy Terminal (Private) Limited

Lahore, February 27, 2018 (PPI-OT): The ratings reflect sustained operations of Engro Elengy Terminal (Private) Limited (EETPL). The business profile of EETPL is strong, emanating from GoP’s commitment to manage prevailing energy crises in the country by way of imported LNG. Thus, a sizable and recurring stream of income is ensured. SSGC, the sole intermediary (rated “A+”), has demonstrated timely payments against committed purchases despite challenges. Additionally, Stand-By Letter of Credit, covering capacity payments for six months provides comfort.

Stable stream of revenue leads to build up of surplus cash, which after making committed payments to lenders would be distributed to sponsors regularly, as per policy, going forward. However, Corporate Guarantee from Engro Corporation soothes financial risk. The ratings take significant support from EETPL’s association with Engro Corporation Limited, which has demonstrated financial strength. The ratings remain dependent on smooth operations of the terminal, and conduct of SSGC with reference to the timely payments to EETPL. Meanwhile, debt service coverages and other financial related metrics must remain strong.

February 16, 2018

PACRA Assigns Entity Ratings to Bakri Energy Limited

Lahore, February 16, 2018 (PPI-OT): The ratings reflect Bakri Energy’s association with a strong sponsor – Saudi based Bakri Group. The company has a growing presence in competitive oil marketing industry. Over the years, Bakri Energy has managed to gain 3% market share and has 300 retail outlets. Bakri Energy capitalizes on second largest oil storage infrastructure of over 180,825 MTs spread across three terminals at Port Qasim, Machike and Shikarpur. The company’s significant ongoing and expected investment in infrastructure (storage, supply chain, and retail outlets) will facilitate sustainable growth. The company has witnessed stable growth in revenues where one-third of the revenue is generated from sales of Furnace Oil.

Due to lower consumption of Furnace Oil in the country, the management intends to diversify the revenue stream and improve earnings: Bakri Energy plans to focus on retail clients and enhance its supply chain infrastructure by setting-up its own supply chain company. To nurture its retail penetration the company is 1) rebranding its outlets on model lines in a phased manner, 2) open new outlets along CPEC route and in the central parts of the country (mainly Punjab) where it has currently, low share, and 3) laying down supportive storage capabilities to ensure timely availability of its products.

The rating is supported by strong management structure reflected by three management committees in place to efficiently procure and deliver the product. In order to support expansion, the company would be using a combination of debt and initial public offering proceeds. Bakri Energy has healthy financial risk profile with strong coverage indicators and low leveraging. Currently, the company has no long-term debt whereas short-term borrowing needs emanate from working capital management. Given its plans, the debt level would go up but moderately. In addition to the timely development of infrastructure and supply chain, the ratings are dependent on Bakri Energy’s ability to build broad-based market penetration. This should help to minimize the impact of constrained demand of FO.

January 30, 2018

PACRA assigns Broker Management Rating to Alfalah Securities (Private) Limited

Lahore, January 30, 2018 (PPI-OT): Broker Management Rating of Alfalah Securities (Private) Limited apprehend its emerging position in the country’s brokerage industry. The rating reflects company’s well-adopted approach to keep market risk low. This mainly emanates from prohibition to take proprietary exposure in the market. Currently the company has several foreign broker/dealers on its panel and management is consistently working to expand further. Growing market share on foreign front, experienced top management, adequate risk management procedures are the key traits of the company.

Company is subsidiary of Bank Alfalah Limited, four top management personnel of the bank are currently at the board of the company in capacity of non-executive directors. Furthermore, company has plan to increase synergy with the bank to further enhance its retail segment. Company’s revenue stream is building up and lately reached its breakeven level. Sustainability of this trend is important.

Robust IT infrastructure installed, single ERP platform with full integration of modules. Company has well-developed research department which provides various market reports to its clients on daily basis. Furthermore, value added services including mobile app is available.

The rating entails on the company’s ability to improve its revenues volume and diversity to strengthen its emerging positioning in the industry. Moreover, key team, though comprising seasoned professional, is relatively new to Alfalah securities; holding and delivering together is critical.

January 29, 2018

PACRA Maintains Ratings of Jahangir Siddiqui and Company Limited

Lahore, January 29, 2018 (PPI-OT):The ratings reflect JSCL’s strong risk absorption capacity emanating from a sizeable investment portfolio mainly financed through equity. These are pre-dominantly strategic in nature; notably most are listed with adequate liquidity. JSCL has built a non-strategic book of investments having a market value of over PKR3bln at end Sep-17.

The company intends to penetrate in energy, petroleum and infrastructure segments. JSCL’s financial profile is supported by its strategic investments in financial sector – Banking and Insurance. The company benefits from ensuing dividend stream, which is expected to increase with improving underlying entities. Oversight framework for the strategic investments is improving. JSCL has a low leveraged capital structure.

JSCL intends to fund it’s new core investments through a combination of debt and internal sources given gestation period of most initiatives, these are primarily finance through long term debt instruments. JSCL has an established track record for issuance of debt instruments. Currently it has three outstanding instruments, while it is planning to issue another shortly. Given its regular income flow, interest and principal coverages remain good.

The ratings are dependent on the company’s ability to augment cash producers in its investment book. The improvement in the performance of the company’s strategic investments provides comfort. Diversification of the investment book among sectors would be beneficial. Financial discipline remains important for the ratings.