Press Release

JCR-VIS Assigns Initial Entity Ratings to Joyland Limited

Karachi, February 19, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) to Joyland Limited (JL). Outlook on the assigned ratings is ‘Stable’.

The ratings assigned to JL take into account its moderate business risk profile. While revenue remains highly sensitive to product / service and price elasticity, JL’s experience and expertise in amusement industry along with strategically chosen locations of facilities, largely mitigate the associated risk. Moreover, high business potential given very low penetration of amusement industry is also a key rating factor. However, the ratings remain sensitive to the anticipated benefits from upcoming projects for organic needs of the company and repayment of its financing liabilities in line with the timelines of their projects.

JL’s flagship amusement park facility currently contributes around two third of overall revenue. Sales have witnessed an increase in FY17 and subsequently mainly on account of higher revenue from flagship park and other locations, food business, consultancy and construction services. Gross margins increased during FY17 mainly on the back of expanding operations and increase in revenue from high margin consultancy services; resultantly net profit also increased in the outgoing year. Higher sales were reported in 1HFY18 that was mainly attributed to the new projects coming online along with steadily increasing revenue stream from the existing projects. The management expects further growth in revenues and stability in margins as the new projects will be coming online shortly.

The ratings also incorporate adequate financial risk profile emanating from low leveraged capital structure and sound coverages. Overall, the company maintains liquidity at comfortable levels with excess liquidity placed in money market mutual funds and stocks. The equity base of the company enhanced mainly on account of capital injection from sponsors. While the company plans to procure a long-term loan for expansion project, gearing is projected to remain low given further equity injection and profit retention. With additional cash flows from upcoming projects, coverages are expected to remain strong.

The company’s operations are primarily technology based; the management has embarked upon further automation to ensure smooth operations. Senior management team of the company comprises experienced resources in the relevant field. The corporate governance framework has room for improvement.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.

Jamal Abbas

Applicable Rating Criteria: Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited