Press Release

VIS downgrades Entity Ratings of Cine Star (SMC-Private) Limited
 

Karachi, April 18, 2020: VIS Credit Rating Company Limited downgraded entity ratings assigned to Cine Star (SMC-Private) Limited (Cine Star) from ‘A-/A-2’ (Single A Minus/A-Two) to ‘BBB+/A-2’ (Triple B Plus/A-Two). The ratings have been placed on ‘Rating Watch’ with ‘Negative’ outlook. Long term entity rating of ‘BBB+’ reflects adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. The previous rating action was announced on December 31, 2019.

Change in ratings incorporate delay in commitment of the sponsor to inject equity to the tune of Rs. 1b to strengthen risk profile of the institution. With the advent of corona virus pandemic along with the continued lockdown as well as the increasingly challenging economic environment, the demand outlook for the cinema industry is considered weak. It is also expected that permission to re-commence business for the entertainment industry may be severely lagged. Status of the assigned rating is therefore uncertain as an event of deviation from expected trend has occurred; additional information will be necessary to take any further rating action, warranting a ‘Rating-Watch’ status. With the overall demand compression which will virtually impact all lines of industry, ratings are being placed on ‘Negative’ outlook. The ratings are dependent upon maintenance of sales, profit margin, debt service coverage, and gearing ratios at an adequate level, with outlook subject to be reviewed once the situation stabilizes.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 201) or Ms. Muniba Abdullah, CFA (Ext: 215) 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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