Press Release

VIS maintains Ratings of Masood Textile Mills Limited with ‘Rating Watch-Negative’ status
 

Karachi, April 27, 2020: VIS Credit Rating Company Limited (VIS), while maintaining the entity ratings of Masood Textile Mills Limited (MTM) at ‘A-/A-2’ (Single A-Minus/A-Two) and instrument rating of ‘A’ (Single A) of the proposed secured & privately placed long-term Islamic certificates (Sukuk), has placed both on ‘Rating Watch-Negative’ status. The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. The previous rating action was announced on June 21, 2019.

MTM is a vertically integrated textile composite that is primarily involved in manufacturing and export of knitted apparels. The company is one of the largest knitwear manufacturer and exporter in Pakistan. Product portfolio of the company mainly include T-shirt, polo shirt, jogging suit, Henley shirt, Raglan shirt, tank top, shorts, pants and sleepwear. Major export markets of the company include North America, Europe, Asia and Ocean Pacific region; over the last three years the company has been able to rationalize geographical concentration; the same is evident given decline in revenue concentration on a timeline basis, though still remain high. Moreover, customer concentration is evident as top 5 customers accounted for half of total sales during the outgoing year.


With the advent of global corona virus pandemic, the demand outlook for textile products in general and especially value added export oriented units looks weak. 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 demand compression emerging from ongoing global crisis and continued lockdown situation coupled with leveraged capital structure of the company, ratings are being placed on ‘Negative’ outlook. The ratings are dependent upon maintenance of overall sales, market share in exports, 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 Ms. Maham Qasim (042-35723411-13, Ext. 8005) and/or the undersigned at 021-35311861-66 (Ext. 201) or email at info@vis.com.pk .




Faryal Ahmad Faheem
Deputy CEO


Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx



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