The Pakistan Credit Rating Agency (Pacra) has upgraded both the long-term and short-term entity ratings of Kohat Cement Company Limited to 'A' (Single A) and 'A 1' (A One), respectively. The ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.
The rating reflects the augmentation in the risk absorption capacity through retention of robust profits and a recent right issue. Despite an anticipated decline due to substantial capacity expansions across the sector, the overall capacity utilisation and margin levels are expected to remain at reasonably comfortable levels in the wake of growing cement demand and likely continuation of producers' understating.
KCCL, owing to its advantage of location and expected increase in market share through sizeable capacity enhancement, is well positioned to capitalise on the emerging business opportunities.
PICIC: The Pakistan Credit Rating Agency (Pacra) has maintained the long-term and short-term entity ratings of Pakistan Industrial Credit & Investment Corporation Limited (Picic) at 'AA' (Double A) and 'A 1+' (A One Plus), respectively.
The ratings denote a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments. These ratings remain on 'Rating Watch' pending outcome of the expected merger with Picic Commercial Bank Limited.
Picic's ratings reflect the Corporation's maintained risk absorption capacity supported by well-diversified income streams from stable and sustainable sources, and the largely maintained relative positioning among the larger financial sector entities. Though having made substantial contribution to the Corporation's profitability in recent years, income from capital market operations will remain vulnerable to volatility risk emanating from fluctuations in the stock market.
The renewed focus on core business operations is expected to lend further stability to the income stream. At the same time, the sustainability of Picic's performance trends is contingent on the ability to improve spreads on lending operations as these remain considerably lower than those of commercial banks. The proposed merger with Picic Commercial Bank Limited (PCBL) is expected to redress this relative disadvantage.
However, the terms of merger and the timing of its consummation remain to be finalised. At this stage, therefore, Corporation's prospects are clouded by a degree of uncertainty. Consequently, the ratings remain on 'Rating Watch'.
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