VIS upgrades entity rating of Digital World Pakistan (Private) Limited

Business News English

Karachi, June 30, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has upgraded the entity rating of Digital World Pakistan (Pvt.) Limited (DWPL) from ‘BBB+/A-2’ (Triple B Plus/A-Two) to ‘A-/A-2’ (Single A Minus /A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on July 13, 2020.

The assigned ratings of DWPL take into account sponsors’ industry experience, particularly in the end-to-end supply chain management, strong brand recognition and loyalty among customers in the consumer durable industry and long-standing business relations with vendors and dealers. The ratings draw comfort from largely sustained topline and profitability during the outgoing year despite supply and demand disruptions due to pandemic. Revision in rating takes into account healthy sales growth in the ongoing year with increase manifested in all major products led by higher volumetric sales and average selling prices. Leverage indicators have improved in line with higher equity base.

Debt service coverage, albeit decreased, has remained adequate. Cognizant of high competition, the company has launched EcoStar-branded air-conditioners to tap lower segment of the market in FY20. Given significant dependence on distribution rights of Gree-branded products, ratings will remain sensitive to the maintenance of strategic relations with Gree Electric Appliances Inc. The ratings would also remain sensitive to dynamic consumer preferences for electronics goods, high price sensitivity and vulnerability to foreign exchange risk amidst low pricing power. Sustained growth in revenues while containing leverage indicators would remain key rating drivers, going forward.

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

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