JCR-VIS Credit Rating Ltd (JCR-VIS) reaffirms medium to long-term entity rating of Saudi Pak Industrial and Agricultural Investment Co at 'AA+' (double A plus) with a 'stable' outlook.
The short-term entity rating has also been reaffirmed at A-1+ (A one plus). The ratings primarily reflect the strong implicit support the company enjoys from the governments of Pakistan and Saudi Arabia, the joint venture partners with 50:50 shareholding.
Ratings recognise the strong growth momentum, emphasis on enhanced core business, and overall resource position of Saudi Pak in FY2003.
Investments in securities and stocks continue to be the largest asset type, which are however, prone to market risk.
Equities portfolio generally comprises good scrips.
The company capitalised the upward trend in the stock market and realised handsome capital gains, which improved the profitability of the company considerably.
However, such gains are volatile in nature. Saudi Pak has also increased its investment in Saudi Pak Commercial Bank Ltd, which may take time to yield cash returns.
Nevertheless, the addition of a commercial bank to the Saudi Pak network has given recognition to the group's franchise value and may result in business synergies.
Last year's growth at Saudi Pak was mainly funded through increased debt. Nevertheless, Saudi Pak continues to maintain a conservative level of leverage and the strong equity base of the company provides room for substantial growth.
JCR-VIS will continue to monitor the sustainability in the growth pattern of the company as reflected in FY2003.
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