Karachi, June 30, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Best Exports (Pvt.) Limited (BEL) at ‘BBB/A-2’ (Triple B /A-Two). The medium to long-term rating of ‘BBB’ denotes adequate credit quality coupled with reasonable and sufficient protection factors. Moreover, risk factors are considered variable with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings has been revised from ‘Rating Watch-Developing’ to ‘Stable’. The previous rating action was announced on April 27, 2020.
The ratings assigned to BEL take into account the company’s presence in the export-oriented value-added textile segment coupled with relatively sound current business risk profile of the textile sector; the same is underpinned by stable and growing demand as US-China Trade disruption enhance sales given major buyers continue to diversify procurement. Ratings also incorporate the company’s fair financial risk profile as evident from improvement in margins from pre-covid values, conservative capital structure with minimal reliance on long-term debt, adequate liquidity and comfortable debt service coverages.
The impact of one-off event leading to sizable growth in local sales during FY19 on account of change in tax structure has been incorporated in the assigned ratings. Further, management’s focus on expanding current operations coupled with backward integration with set up of spinning unit bodes well for the company. Given improvement in the company’s operational performance owing to pandemic led boom in textile sector during the period under review, the outlook assigned to BEL’s ratings has been revised to ‘Stable’.
Even though concerns of successive waves of Covid-19 are present, strong order book of the industry in the ongoing year along with vaccine rollout has largely subsided business risk concerns. However, the ratings continue to remain constrained by relatively limited scale of operations. Going forward, the ratings are dependent on sustenance of margins, maintenance of leverage indicators, realization of projected targets and incremental cash flow generation from backward integration planned along with evolution of sector dynamics post ongoing pandemic.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/
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