Press Release
VIS Maintains Entity Ratings of Adam Securities Limited
Karachi, December 28, 2023: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Adam Securities Limited (ASL) at ‘A-/A-2’ (Single A Minus/A-Two). The long term rating of ‘A-’ reflects good credit quality; Protection factors are sound Risk factors may vary with possible changes in the economy. The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are low. Outlook on the assigned ratings has been revised to ‘Positive’ from Stable. Previous rating action was announced on September 30, 2022.
Adam Securities (ASL) was incorporated in 2001 as a private limited company and subsequently became a public unlisted company in 2016. ASL is principally engaged in provision of equity brokerage services to domestic retail and institutional clients. Major shareholding of the company is vested with Mr. Noman Abdul Majeed who serves as a director of the Company. ASL is a Trading Right Entitlement Certificate (TREC) holder of Pakistan Stock Exchange. The Company is also a Member of Pakistan Mercantile Exchange Limited (PMEX). External auditors are M/s Baker Tilly Mehmood Idrees Qamar Chartered Accountants. Auditors belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP). ASL operates through its head office based in Karachi.
Assigned rating takes note of the Company’s sustained market positioning during FY23. In tandem with industry trend, brokerage volumes depicted contraction, subsequently declining the Company’s core brokerage commission. However, in order to reduce dependence on brokerage segment, the Company has diversified its revenue stream through engaging in trade of mutual funds and T-bills, revenues of which have almost increased by a two-fold in comparison with the preceding year. Uptick in contribution from gain on sale of T-bills and mutual fund segment has also provided comfort to profitability of the Company. Other revenue streams including underwriting and advisory income also reflect improvement although their contribution remained low during FY23. Revision in outlook also takes note of the Company’s improvement in liquidity profile. Capitalization indicators also witnessed improvement on the back of decrease in short term borrowings and improvement in the Company’s equity base owing to issuance of bonus shares during the year. The Company’s market risk is considered manageable given decline in short term investments. Majority of the Company’s investment portfolio comprises of investments in T-bills possessing a low risk profile. Going forward, maintenance of liquidity and capitalization indicators, low market risk and further improvement in the Company’s operational profile along with augmentation of revenues will remain key rating drivers.
For further information on this rating announcement, please contact Ms. Syeda Batool Zehra Zaidi (Ext: 216) or the undersigned (Ext: 207) at (021) 35311861-64 or email at info@vis.com.pk.
Syed Asif Ali
Executive Director
Applicable Rating Criteria: Securities Firms:
https://docs.vis.com.pk/docs/SecuritiesFirm202007.pdf
VIS Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf