Press Release

JCR-VIS Assigns Entity Ratings to Pearl Securities Limited

Karachi, October 21, 2015: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned initial entity rating to Pearl Securities Limited (PSL) of ‘BBB/A-3’ (Triple B/A-Three). Outlook on the assigned ratings is ‘Stable’.

The ratings take into account sponsor profile of the company with majority shareholding vested with General Provident and Investment (GPI) Fund, established by the Government of Khyber Pakhtunkhwa (KP). The fund holds 39% stake in the company while remaining shareholding is represented by individual investors.

PSL is principally engaged in provision of equity brokerage services with operations conducted through its head office based in Karachi and six branches in the provinces of Sindh, Punjab and KP. While senior management positions are adequately filled, the decision making process exercised at PSL signifies considerable key person risk. Going forward, management envisages strengthening of its policy framework.

Over the last three years, PSL’s profitability has depicted improvement largely on the back of income from leverage financing while revenues generated from its core operating activities represented one-third of total earnings base in 2015; extension of such financing facilities has been significantly reduced in the out-going year. Stability of earnings is likely to be greater if sourced from core business activities including financial advisory and underwriting services; prudence of overall and individual underwriting risk exposures in relation to its equity will support overall risk profile of the company.

At end-FY15, debt leverage indicators remained on the higher side. Debt profile of the company includes facilities primarily utilized to finance short term investment portfolio. The company’s proprietary book features sizeable concentration risk and rationalization of the same is considered essential.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Mr. Mohammed Khalid Ali (Ext: 507) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi
Deputy CEO

Applicable rating criteria: Methodology - Securities Firms Rating (May 2015)

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 2015 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited