Press Release

VIS Credit Rating Company Reaffirms Entity Ratings of Next Capital Limited

Karachi, April 10, 2019: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the entity ratings of Next Capital Limited (NCL) at ‘A-/A-2’ (Single A-Minus/A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on March 19, 2018.

The reaffirmation of ratings incorporates established market position of NCL in the business of brokerage and corporate advisory services. Ratings also take into account the company’s diversified revenue streams which support overall business risk profile. Moreover, profitability profile has improved during HFY19 in contrast to peers. Ratings are constrained by weak sector dynamics and weakening in capitalization levels since last review.

Performance of the equity market has remained dismal over the last 22 months with trading volumes depicting a significant decline, largely owing to aggressive foreign selling, sizeable current account deficit & rising fiscal deficit and slow-down in GDP growth. Given the operating environment, players with efficient and variable cost structures focusing on high margin business and diversification in revenue streams are expected to fare better vis-à-vis peers. Going forward, focus of brokerage companies is expected to remain on cost rationalization, increased portfolio diversification into derivatives and focus on higher margin business. Nevertheless, sector outlook is expected to remain challenging.

Given the challenging operating environment, management has now enhanced focus on corporate finance and investment advisory segment. Further diversification in revenue streams is planned through new ventures. On the brokerage front, focus remains on retail brokerage. Overall earning profile has depicted weakening since last review; however, the company posted profit during HFY19 on account of cost control measures. Going forward, corporate advisory pipeline and change in taxation regime is projected to support profitability profile.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. Javed Callea (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi

Applicable rating criteria: Methodology - Securities Firms Rating (June 2017)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (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.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.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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