Press Release

VIS Assigns Initial Entity Ratings to Digital World Pakistan (Pvt.) Limited

Karachi, February 27, 2019: VIS Credit Rating Company Limited has assigned initial entity ratings of ‘A-/A-2’ (Single A-Minus/A-Two) to Digital World Pakistan (Pvt.) Limited (DWPL). 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. Outlook on the assigned ratings is ‘Stable’.

DWPL is an assembler of renowned consumer durable brands. The company is a part of DWP Group and is majority owned by the sponsoring family. The assigned ratings take into account sponsor’s industry experience, particularly in the end-to-end supply chain management. The business risk profile of DWPL is underpinned by positive dynamics of consumer durables industry, strong brand equity in air conditioner and LED television categories and established business relations with vendors and dealers. The ratings also incorporate recent augmentation of production capabilities, consistent upgradation of product lines, and aggressive marketing spending, resulting in enhanced sales. However, the ratings are constrained by significant dependence on distribution rights of Gree-branded products, dynamic consumer preferences for consumer durable goods, high price sensitivity and vulnerability to foreign exchange risk. The ratings also factor in comparatively low profit margins, slightly higher debt leverage indicators, and weak corporate governance framework. The ratings will remain sensitive to the maintenance of strategic relations with Gree Electric Appliances Inc. and improvements in margins and leverage indicators, going forward.

For further information on this rating announcement, please contact undersigned (Ext: 201) or Mr. Maimoon Rasheed (Ext: 8008) at 35311861-70/ 042-35723411 or fax to 35311872-3.

Javed Callea
Advisor

VIS Entity Rating Criteria Industrial Corporate (May 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 February 27, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.