Press Release

VIS Revises Ratings of Treet Corporation Limited

Karachi, September 24, 2019: VIS Credit Rating Company Limited (VIS) has revised the entity ratings of Treet Corporation Limited (TCL) to ‘A/A-2’ (Single A /A-Two) from ‘AA-/A-1’ (Double A Minus/A-One). Preliminary rating of TCL proposed Sukuk issue has also been revised from ‘AA-’ (Double A Minus) to ‘A’ (Single A). The medium to long-term rating of ‘A’ denotes good credit quality, 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 payment coupled with sound company fundamental and liquidity factors. Outlook on the ratings has been revised from ‘Stable’ to ‘Negative’. The previous rating action on entity, PTC and sukuk was announced on May 21, 2019.

The ratings incorporate TCL’s strong sponsorship profile coupled with implicit support demonstrated by primary sponsor in terms of continuing equity injection. Ratings reflect weakening in industry dynamics resulting in slackened demand in the blade segment as an outcome of price escalation leading to increased market risk and fierce competition in the battery segment impacting the margins and business risk profile of the company. The ratings take into account diversified revenue stream of the company owing to presence in different product segments and cost rationalization measures undertaken by the company. However, significant deterioration in financial risk profile on the back of sizeable loss incurred by the company during the last two consecutive fiscal periods resulted in weakening of its liquidity profile and risk absorption capacity. Ratings remain dependent upon recovery of margins and strengthening of capitalization indicators. VIS has an outstanding rating of ‘AA’ assigned to TCL’s Participation Term Certificates (PTC); the instrument is expected to mature by end-October 19.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.


Javed Callea
Advisor

Applicable rating criteria: Corporates (May 2019)
Notching The Issue: (June 2016)
https://www.vis.com.pk/kc-meth.aspx

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 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 September 24, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.