Press Release
JCR-VIS Assigns Positive Outlook to Allied Rental Modaraba
Karachi, July 4, 2012: JCR-VIS Credit Rating Company Limited has maintained the entity ratings of Allied Rental Modaraba (ARM) at ‘A/A-2’ (Single A/A-Two). Outlook on the ratings has been revised from ‘Stable’ to ‘Positive’.
Managed by Allied Engineering Management Company (Private) Limited, a wholly owned subsidiary of Allied Engineering Services Limited (AESL), ARM is the market leader in generator rental business. Support from AESL, the sole dealer of Caterpillar (CAT) products in Pakistan, remains a key rating factor.
The ratings take into account growth in revenues and profitability on the back of increase in operating assets. Concentration in revenues is high and the management plans to diversify revenue streams by enhanced focus on the logistics business, where a number of top-tier clients have been added recently. Moreover focus on earth moving equipment for construction and infrastructure related projects will also increase once the operating environment becomes enabling.
Liquidity profile is considered strong in view of the sustained cash flow from operations. With stable internal capital generation since inception, capitalization levels have strengthened over the years resulting in low leverage. Going forward, rapid expansion in operating assets is planned which is projected to be funded through a mix of debt and internal cash flows. Ability to maintain leverage at moderate levels while pursuing growth related objectives will remain important. The governance framework can be further strengthened by enhancing the level of independence on the board and formally documenting checks and controls in the client selection process.
For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA (Ext: 506) or Mr. Javed Callea (Ext: 501) at 35311861-70 (10 lines) or fax to 35311873.
Jamal Abbas Zaidi
Deputy CEO