Tag Archives: JCR-VIS Credit Rating Company Limited

JCR-VIS Reaffirms Entity Ratings of Ittehad Chemicals Limited

Karachi, January 25, 2018 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Ittehad Chemicals Limited (ICL) at ‘A-/A-2’ (Single A Minus/ A-Two). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 20, 2016.

Ratings assigned to ICL take into account the company’s prominent position in the chlor-alkali sector. Ratings also incorporate conservative risk appetite of sponsors that has resulted in adequate financial profile of the company. Ratings also recognize management’s continuing efforts of technology advancement in order to minimize operating costs.

The company is in the process of replacing IEM-I plant with more efficient IEM-III, which is likely to be commercially operational by 4QFY18. Subsequently, the management intends to utilize IEM-I plant only on a need basis. Meanwhile, the obsolete DSA plant has been scrapped in FY17.

Caustic soda remained the primary contributor in overall sales during FY17. While revenue increased on the back of higher volumetric sales, the positive impact was partly diluted on account of decline in margins. Gross margins declined mainly owing to lower average prices of caustic soda and some other auxiliary products. Recent increase in the product price and commencement of timely commercial operations of IEM-III are expected to help in improving margins. Being prudent, the company continues to recognize provision related to industrial as well as captive power consumption under Gas Infrastructure Development Cess.

The company has issued right shares during the last two consecutive years. This along with reduction in borrowings have resulted in decline in gearing while debt service coverage has remained comfortable. The company has embarked upon exploring various avenues in order to diversify its business risk. Going forward, gearing and coverages are projected to remain sound.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS Reaffirms IFS Rating of Jubilee General Insurance Company Limited

Karachi, January 23, 2018 (PPI-OT):JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of Jubilee General Insurance Company Limited (JGI) at ‘AA+’ (Double A Plus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on November 08, 2016.

The rating assigned to the company draws strength from JGI’s extensive experience history and being amongst the largest private general insurance companies in Pakistan. JGI’s association with a strong primary sponsor is also a key rating factor. Rating also takes into account company’s sound capitalization indicators, strong liquidity profile and solid underwriting performance on a timeline basis. JGI’s senior management team comprises qualified and experienced resources; majority of them having long association with the company that has been instrumental in effective implementation of the business strategy.

JGI’s gross premium remained largely stagnant against the industry’s growth of 5.7% during FY16. Business mix remained diversified with fire, motor, and miscellaneous as major business segments. Takaful window operations continued to show improvement in terms of business volumes. Given the prevailing price competition in Takaful business, JGI plans to focus small and medium sized businesses and retail clientele.

During FY16, gross claims ratio increased on account of higher claims experienced in the fire segment, however as a result of adequate reinsurance coverage, impact on net account remained muted. The company has adequate reinsurance arrangements with a diversified panel of reinsures having sound risk profiles. Given the anticipated growth in infrastructure projects, treaty capacities of bond, engineering, motor and fire segments were enhanced for FY17.

In line with past trends, profitability derived strength from sound underwriting performance of the company coupled with sizeable contribution from the investment income. On account of higher management expenses, underwriting expense ratio increased, while combined ratio remained stable. However, net profit decreased on account of change in tax regime regarding capital gains during FY16.

Given the increase in capital base on account of profit retention, leverage indicators improved. Liquidity profile is also considered sound in view of presence of sizeable liquid assets in relation to total liabilities. With largely volatile capital market during FY17, market value of investment portfolio witnessed some decline in 9MFY17. Insurance debt of the company, net of business from CPEC project, remained largely stable.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS Reaffirms Entity Ratings of AKD Securities Limited

Karachi, January 19, 2018 (PPI-OT):JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the entity ratings of AKD Securities Limited (AKDSL) at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on August 2, 2016.

Assigned ratings to AKDSL reflect the company’s position as one of the leading brokerage houses in the country with sizeable market share. Ratings also incorporate adequate financial profile and control infrastructure. Moreover, vacancies in the senior management team have been filled by experienced professionals.

Brokerage income has recorded sizeable growth during FY17 on the back of healthy increase in retail commission income. However, brokerage income from foreign clients and domestic institutions has remained stagnant over the last two years. Management plans to sign new partnerships and further increase breadth of research function to grow foreign and institutional business. In line with industry trend, brokerage income has witnessed a dip during 1HFY18 due to decline in market volumes.

Despite the decline in corporate advisory fees, growth in brokerage commissions resulted in higher revenues during FY17. Overall profitability was lower on account of higher provision against doubtful debts. With equity brokerage representing majority of topline, profitability remains dependent on market movements. To augment corporate advisory income two senior resources have been hired during 2017. Given the sizeable mandates in hand, management expects corporate advisory income to depict healthy growth in the ongoing year.

Overdue trade debts have witnessed a noticeable decline on the back of recoveries during FY17; however, the same continues to remain sizeable. Moreover, settlement of related party’ liabilities owed to National Bank of Pakistan have also been noted positively. The company’s sizeable investment in a long term exploration and production company (subsidiary) witnessed a noticeable decline in FY17 due to significant re-measurement adjustment during the period. Resultantly, equity base and loss absorption capacity has witnessed decline.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS Reaffirms Fund Stability Rating of ABL Government Securities Fund

Karachi, January 16, 2018 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Fund Stability Rating of ABL Government Securities Fund (ABL GSF) at ‘A (f)’ (Single A (f)). Previous rating action was announced on 30th December 2016. As per pre-defined exposure limits, the fund must deploy at least 70% of its assets in government securities. On month-end average basis, the fund deployed around 68.2% of its net assets in government securities.

Credit quality of exposures is sound with sizeable investment in government securities and major avenues having a minimum credit rating of ‘AA-’ and above. Duration has remained in compliance with internal policy limit, and also in line with JCR-VIS’s internal criteria. Being largely invested in government securities, the liquidity profile of the fund remained sound. Net assets of the fund declined to Rs. 3.8b (FY16: Rs. 9.5b) by end-FY17; considerable redemption was witnessed in FY17 primarily on account of lower return offered by government securities funds.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS Reaffirms Fund Stability Rating of ABL Income Fund

Karachi, January 16, 2018 (PPI-OT):JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Fund Stability Rating of ABL Income Fund (ABL IF) at ‘A(f)’ (Single A(f)). Last rating action was taken on 30th December 2016. The operational policy of the fund stipulates that a quarter of assets must be deployed in cash and near cash instruments. On average, the fund maintained 20.9% exposure in TFCs with cash and bank balances and government securities mainly comprising remaining investments.

Credit quality of exposures has remained in line with JCR-VIS’s criteria for the assigned rating with over fifty percent of investments comprising exposures in at least ‘AA-’ rated investment avenues. There have been no breaches of internal policy limits and JCR-VIS internal duration criteria. The same will continue to be tracked by JCR-VIS, going forward. Net assets of the fund increased slightly to Rs. 3.9b (FY15: Rs. 3.7b) by end-FY17 with the in-flow of both corporate and retail investors; although retail portion decreased during FY17.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

JCR-VIS Reaffirms Fund Stability Rating of ABL Islamic Income Fund

Karachi, January 16, 2018 (PPI-OT):JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Fund Stability Rating of ABL Islamic Income Fund at ‘A(f)’ (Single A (f)). The previous rating action was announced on December 30th, 2016. The rating incorporates policy guidelines and actual investment allocation portfolio. On average basis, more than half of net assets are held as cash and bank balances, thus supporting liquidity.

Credit quality of exposures has remained in line with JCR-VIS’s criteria for the assigned rating with investments comprising exposures in at least ‘A’ rated investment avenues. There was no duration breach according to internal and JCR-VIS set policies. Net assets of the fund increased to Rs. 3.9b (FY16: Rs. 3.3b) by end-FY17, with growth stemming from unrelated corporate investors. However, investor concentration in the fund has increased over the year.

For more information, contact:
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk