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

Karachi, January 16, 2019 (PPI-OT): JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Fund Stability Rating of ABL Islamic Income Fund (ABL IIF) at ‘A(f)’ (Single A (f)). The previous rating action was announced on January 16th, 2018.

The rating incorporates policy guidelines and actual investment allocation portfolio. Net assets of the fund increased to Rs. 5.01b (FY17: Rs. 3.9b) at end-FY18. 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. Duration of the fund has declined on a timeline basis indicating lower exposure to market risk. Actual risk profile of the fund has been maintained in line with the operational investment policy.

For more information, contact:
Director Compliance and Rating Analytics,
JCR-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: http://jcrvis.com.pk/

JCR-VIS Reaffirms Fund Stability Rating of ABL Income Fund

Karachi, January 16, 2019 (PPI-OT): Stability Rating of ABL Income Fund (ABL IF) at ‘A(f)’ (Single A(f)). Previous rating action was announced on 16th January 2018. ABL-IF is an open end fund launched in September 2008. 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 around half of exposure in cash and bank balances with TFCs and government securities comprising remaining investments. Credit quality of exposures has remained in line with JCR-VIS’s criteria for the assigned rating with investment exposure in securities rated ‘A+’ and above. Net assets of the fund decreased to Rs. 2.8b (FY17: Rs. 3.9b) at end-FY18. There was no duration breach according to internal and JCR-VIS set policies.

For more information, contact:
Director Compliance and Rating Analytics,
JCR-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: http://jcrvis.com.pk/

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

Karachi, January 16, 2019 (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 16th January 2018.

ABL GSF is designed to deliver optimal risk adjusted returns by investing mainly in a mix of short to long term government securities and other debt instruments. As per pre-defined exposure limits, the fund must deploy at least 70% of its assets in government securities based on quarterly average investment to be calculated on a daily basis. Credit quality of exposures is sound with sizeable investment in government securities and avenues having a minimum credit rating of ‘AA-’. Net assets declined to 3.1b (FY17: Rs. 3.8b) at end-FY18 while proportion of retail investments reduced slightly. There was no duration breach according to internal and JCR-VIS set policies. Being largely invested in government securities, the liquidity profile of the fund remained sound.

For more information, contact:
Director Compliance and Rating Analytics,
JCR-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: http://jcrvis.com.pk/

JCR-VIS Reaffirms Fund Stability Rating of ABL Cash Fund at ‘AA (f)’

Karachi, January 16, 2019 (PPI-OT): JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Fund Stability Rating of ABL Cash Fund (ABL CF) at ‘AA(f)’ (Double A(f)). Previous rating action was announced on 16th January 2018. Established in July’2010, ABL CF operates as an open end money market fund. Credit quality of the fund has remained in line with set limits with no allocation of funds to below ‘AA’ rated entities.

The fund has also remained compliant with weighted average maturity (WAM) limits. Liquidity profile of the fund is supported by high proportion of total assets in cash. Net assets of the fund amounted to Rs. 13.2b at end FY18 (FY17: Rs. 7.64b); while retail portion of the fund has increased at end-FY18, the remaining major portion of investment comprises unrelated corporates.

For more information, contact:
Director Compliance and Rating Analytics,
JCR-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: http://jcrvis.com.pk/

JCR-VIS Reaffirms Ratings of Haleeb Foods Limited

Karachi, January 11, 2019 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Haleeb Foods Limited (HFL) at ‘A/A-2’ (Single A/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 ratings is ‘Stable’. Previous rating action was announced on October 31, 2017.

HFL is a subsidiary of MEGA Foods (Pvt.) Limited, while the remaining shareholding is vested with the Chaudhry family and others. HFL is one of the major dairy companies operating in the packaged milk and dairy products segment of Pakistan’s dairy industry. The assigned ratings take into account moderate business risk profile of the company, underpinned by positive demand dynamics of the dairy industry, established brand equity in the tea whitener and UHT milk categories and further diversification into new variants of fruit juices and flavoured milk products. The ratings also factor in low financial risk of the company as depicted by low leveraged capital structure and adequate coverages. The liquidity position of HFL is supported by investments in cash and money market mutual funds.

The ratings are constrained by increasing intensity of competition in value-added dairy and challenging operating environment of the organized dairy segment. Moreover, the declining trend in sales and profits was mainly on account of reduced demand for tea whiteners, which is the major sales driver of the company. Meanwhile, effective implementation of strategic initiatives to halt the declining trend in sales remains to be seen in a scenario where increasing pressure of commodity inflation has been witnessed recently due to devaluation of local currency. The ratings will remain dependent on maintenance of debt leverage at prudent levels, profit margins, and sponsors’ support, going forward.

For more information, contact:
Director Compliance and Rating Analytics,
JCR-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: http://jcrvis.com.pk/

JCR-VIS Upgrades Ratings of U Microfinance Bank Limited

Karachi, January 11, 2019 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the short-term entity ratings of U Microfinance Bank Limited (UMBL) from ‘A-2’ (A-Two) to ‘A-1’ (A-One). Long-term entity rating and subordinated Tier 2 TFC rating has been reaffirmed at A (Single A) and ‘A-’ (Single A Minus), respectively. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on April 27, 2018.

The rating action incorporates improvement in funding profile and liquidity buffer of the Bank post injection of Rs. 4b Tier 2 capital by the sponsor, Pakistan Telecommunication Company Limited (PTCL). Ratings also reflect strong sponsor profile and demonstrated support of PTCL. PTCL has been assigned an entity rating of AAA/A-1+ (Triple A/A-One Plus) and is co-owned by the Government of Pakistan and Etisalat International Pakistan (LLC) (Etisalat). Improvement in financial profile of UMBL has continued on a timeline basis and is a key rating driver. Going forward, ratings are dependent on achievement of projected growth plans while improving asset quality indicators, strengthening deposit profile and retaining buffer over regulatory capital requirement.

Over the last three years, advances portfolio has depicted strong growth with the same increasing from Rs. 913m at end-2015 to Rs. 17.4b at end-Dec’2018. Increase in loan portfolio is a function of improved productivity indicators and expansion in branch network. UMBL targets to open 60 branches in the ongoing year which will allow the Bank to achieve further geographical diversification. Livestock/crop loan remains the forte of UMBL with the Bank diversifying in microenterprise and related loans. Infection in the financing portfolio has increased on a timeline basis but continues to remain within manageable levels despite significant growth in financing portfolio.

Profit before tax has grown at a CAGR of 201% over the last three years on the back of increase in financing portfolio. Growing profitability levels, as has been witnessed in 2017 and 2018 along with incremental benefit of Tier 2 capital is projected to support growth plans of the Bank. Funding strategy of UMBL entails a mix of deposits and borrowings to finance growth in the bank’s operations. Improvement in deposit profile (including depositor concentration and cost of deposit) remains a key focus area of the management. Maintenance of adequate liquidity buffer is considered important till granularity in deposit base is achieved.

For more information, contact:
Director Compliance and Rating Analytics,
JCR-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: http://jcrvis.com.pk/

JCR-VIS Assigns Rating to proposed Islamic Commercial Paper of Hascol Petroleum Limited

Karachi, January 11, 2019 (PPI-OT): JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned preliminary rating of A-1 (Single A One) to HPL’s proposed privately placed and unsecured Islamic Commercial Paper (ICP) of up to Rs. 4.0billion (inclusive of Green Shoe Option of Rs. 500m) having a tenor of up to six months. The ICP would be Shariah compliant.

HPL plans to raise up to Rs. 4.0billion through a ICP issue having a tenor of up to 6 months to fund working capital requirement. The issue entails bullet payment at maturity and has a rental rate of 6 month KIBOR plus 150bps.

The assigned ratings to the proposed ICP of HPL take into account Company’s position as the second largest Oil Marketing Company in Pakistan and adequate business and financial risk profile. Given the company’s investment in infrastructure, JCR-VIS expects HPL to sustain its market position over the long-term. Ratings also draw comfort from strategic investment of Vitol Dubai Limited in HPL, a significant international player in the oil sector.

However, business risk profile and market share in retail fuels of the company has weakened in view of the overall decline in OMC volumes in 1HFY19. Key risk factors include HPL’s import based operational model and leveraged capital structure which is expected to keep profitability under pressure in the short-term.

Over the long-term, JCR-VIS expects HPL to recover lost market share as macroeconomic indicators stabilize. Management has pursued a number of diversification initiatives which are expected to start contributing to profitability in 2019 but will only become sizeable over the medium term. Liquidity profile of the company is also expected to draw support from reduction in size of projected Capex, favourable working capital cycle and improvement in operational Cashflow in 2019.

For more information, contact:
Director Compliance and Rating Analytics,
JCR-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: http://jcrvis.com.pk/