December, 07 2018 (MLN): JCR-VIS Credit Rating Company Limited has revised the entity ratings of Pearl Securities Limited (PSL) from ‘BBB/A-3’ (Triple B/A-Three) to ‘BBB-/A-3’ (Triple B Minus/A-Three).
Outlook on the assigned ratings continues to remain ‘Negative’.
According to the rating agency, the ratings take into account the sponsors’ profile, with major shareholding vested with General Provident and Investment (GPI) Fund established by Government of Khyber Pakhtunkhwa; the fund holds 39% stake in the company.
However, ratings are constrained by the deterioration in the financial profile of the company on account of decline in profitability and weak efficiency and capitalization indicators.
Overall earnings of PSL witnessed decline on account of reduction in brokerage income due to downturn in market volumes. Going forward, management plans to increase its share of advisory income to enhance revenues.
Moreover, total liquid assets witnessed sizeable decrease due to reduction in market value of short term investments.
Equity base of the company deteriorated due to erosion in value of investments.
However, leverage indicators, at current levels, still pose a risk to financial profile of the company. Management is undertaking efforts to reduce the leverage indicators going forward, which will be tracked by JCR-VIS.
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