Month: May 2023

Karachi, May 31, 2023 (PPI-OT): KSE-100; Upside to continue

Bulls continued to dominate the session as KSE-100 index gained 332 points to close at 41,672. Volumes stood at 198mn shares versus 346mn shares traded previously. The index has closed above its 200-DMA that will restrict downside at 41,340, followed by the 30-DMA at 41,305 points. Meanwhile, a break above yesterday’s high will continue the upward momentum towards 42,110 which may further rise to 42,617 points. Meanwhile, the RSI and the Stochastic Oscillator are moving up, supporting a positive view. Investors are recommended to ‘Buy on dips’, keeping stoploss below the 200-DMA. The support and resistance are at 41,458 and 41,789 levels, respectively.

ATRL: Upside likely

Strategy: ‘Buy on dips’ – targeting Rs167.54 and Rs169.63; stoploss at Rs162.06.

OGDC: Recovery to continue

Strategy: ‘Buy on dips’ – targeting Rs77.67 and Rs80.25; stoploss at Rs75.00.

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Karachi, May 31, 2023 (PPI-OT): VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Al-Karam Textile Mills (Private) Limited at ‘A/A-2’ (Single A/A-Two). Medium to long-term rating of ‘A’ reflects good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A-2’ indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned rating remains ‘Negative’. Previous rating action was announced on May 30, 2022.

Ratings incorporate strong sponsor strength, 40-year track record, vertically integrated operations, diverse product portfolio (including variety of yarn, home textiles, institutional textiles and garments), established clientele of major global retail brands, and a sound retail presence in local market through 52 Al-Karam Studio outlets spread nationwide. Ratings also reflect positive aspects of increased production capacity, new spinning unit under construction, strong revenue growth and improved profitability margin. However, no notable improvement in gearing as envisaged earlier by management, declining debt servicing coverage, elevated stress on working capital cycle and lagging margins and liquidity metrics compared to similarly-rated peers adds to financial risk profile and thus, negative rating outlook has been maintained. In addition, improvements in overall governance and IT infrastructure have been duly noted.

Exports and local sales had an average split of 75:25. Home textiles categorized as either woven or knit made-ups make up the entire export sales, with bedding, curtains, and bedsheets being the major products. Yarn is traded locally, while fabric and garments are sold through a retail brand. Moreover, demand slowdown in knit segment led to a shift towards woven made-ups during the review period.

Sales mix features concentration as more than four-fifths of exports go to US and Sweden, while top ten clients consistently generate over three-fifths of total sales on a timeline, led by IKEA, Walmart and Target; albeit comfort is drawn from long-standing relationship with these reputed international brands. For capacity enhancement, a spinning facility featuring 30,000 spindles is being established in Nooriabad, with building construction currently underway. Machinery was imported in 2021 and funded through a TERF facility, with a repayment term of 10 years. Total project cost went up by ~22% from the initial estimate due to escalating construction and material expenses. The project is scheduled to go live by July’23.

Business risk profile takes into account industry wide growth in exports in FY22; however, recent floods across the country, high interest rate situation, inflationary pressures, higher electricity costs and demand slow down in the current fiscal year pose risks on the sector over the medium term. Ratings are constrained by current weak macroeconomic environment globally and locally. Going forward, improvement in financial performance metrics specifically liquidity and leverage is important for sustenance of ratings.

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/

The post VIS Reaffirms Entity Ratings of Al-Karam Textile Mills (Private) Limited appeared first on Pakistan Business News.

Karachi, May 31, 2023 (PPI-OT): VIS Credit Rating Company Ltd. (VIS) has reaffirmed Broker Management Rating of ‘BMR3’ assigned to Investment Managers Securities Private Limited (IMSPL). Assigned rating denotes sound management quality. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on 11th February, 2022.

The rating signifies sound external control framework. Compliance and risk management, client relationship, HR and infrastructure, financial management, internal controls and regulatory requirements are considered adequate.

The board consists of four members representing three board committees, inclusion of independent directors on board may be considered to avoid repetition of board members in board committees, moreover increasing frequency of board meeting may also enhance overall governance framework.

Rating also takes note of sound external control framework while internal control framework is also considered adequate. Disclosure levels may be improved by adding the director’s report and CEO’s statement to the financial statements while internal control framework can be further strengthened through enhancing the scope of all internal policies. The assigned rating also takes into account the IMSPL’s adequate HR and infrastructure, compliance and risk management. Segregation of internal audit and compliance department may be considered.

Assessment of financial profile indicates deterioration of the Company’s operational profile on account of subdued market activity along with decline in trading volumes. During FY22, decline in market volumes impacted the earning profile however; non-core income generated on account of profit on deposits has supported the bottom line. The efficiency ratio of the company remains high, therefore, reducing administrative expenses while increasing revenue through means other than brokerage income may be considered. Liquidity profile is considered to be adequate, with liquid assets providing 1.1x coverage to total liabilities.

Capitalization indicators are also considered adequate with zero gearing and manageable leverage levels, however equity base remains small. Going forward, augmentation in revenue streams in order to mitigate operational risk, improvement in cost to income ratio maintenance of capitalization indicators and liquidity profile will remain important for the rating. IMSPL is a private limited company holding Trading Rights Entitlement Certificate (TREC) granted by Pakistan Stock Exchange Limited (PSX), and is registered with SECP to provide Trading and Self-Clearing Services.

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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