Press Release

VIS Reaffirms Entity Ratings to Kompass Pakistan (Pvt) Limited
 

Karachi, April 8, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Kompass Pakistan (Pvt.) Limited (KPL) at ‘BBB+/A-2’ (Triple B Plus/A-Two). Long Term Rating of BBB+ reflects adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short Term Rating of ‘A-2’ indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound and access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on February 1, 2019.

The ratings reaffirmation takes into account KPL’s significant market position in the local packaging industry along with a diversified product portfolio. The packaging industry exhibits a moderate business risk evident from its relatively stable customer profile. A major challenge faced by the sector is prices and availability of the raw material specifically polymers such as polypropylene, & polyethylene. Polymers’ prices are largely a function of global crude oil prices, demand supply dynamics and volatility in exchange rate. In view of the recent market dynamics, cost base of raw materials for the company depicts a declining trend which may support margins. Continuity of the same is considered important although is considered challenging given the recent coronavirus outbreak.

Assessment of financial risk profile incorporates moderate profitability indicators, adequate liquidity profile, and high leverage indicators. Profitability of the company improved on the back of growing demand from its clientele and rising prices. KPL continues to maintain high leverage indicators. Debt profile of the company comprises short term borrowings while the remaining is contributed by long term debt from both local and foreign entities. Liquidity profile of the company is considered adequate given moderate cash flows in relation to outstanding obligations.

For further information on this rating announcement, please contact Ms. Muniba Abdullah, CFA (Ext: 215) or the undersigned (Ext: 201) at (021) 35311861-66 or email at info@vis.com.pk.

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Corporates (May 2019)
http://vis.com.pk/kc-meth.aspx

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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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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