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JCR-VIS Assigns AA/A-1+ Ratings to Arif Habib Corporation Limited

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by December 5, 2012 General

Karachi, December 05, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘AA/A-1+’ (Double A /A-One Plus) to Arif Habib Corporation Limited (AHCL). Outlook on ratings is ‘Stable’.

AHCL is the flagship company of the Arif Habib group managed by a capable and experienced management team possessing strong research and investment expertise. The company holds investments in key economic sectors including fertilizer, financial services, steel, cement, power and real estate.

Leverage of AHCL has historically remained low as the company does not engage in borrowings to fund long-term acquisitions. Borrowings have primarily been mobilized for making short-term investments and for onward lending to support subsidiaries and associates.

Such strategy is expected to continue going forward and is critical for maintaining the risk profile of the entity commensurate with the assigned ratings. As internally generated cash is utilized to retire borrowings, leverage is projected to marginalize over the coming years. Liquid securities provide adequate cover against outstanding borrowings.

The strategic portfolio features significant concentration in the fertilizer sector; with performance of one company having been adversely affected due to gas shortage; resolution of the gas crisis in line with decision by the relevant authorities is expected to have favourable impact on the financial profile of that company and hence its dividend paying ability.

Although earning streams are largely dependent on few strong investees, diversification in sources of earnings is expected to improve as certain investments, currently in the development phase, mature and start paying dividends. AHCL is consolidating its existing investments currently and no major cash outlays are planned over the foreseeable horizon. JCR-VIS will continue to monitor the company’s earnings potential vis-à-vis calls on cash, including contingent liabilities.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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