Press Release
VIS Reaffirms Entity Ratings of Transsion Tecno Electronics (Private) Limited
Karachi, May 7, 2025: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Transsion Tecno Electronics (Pvt.) Limited (‘TTE’ or ‘the Company’) at ‘A-/A2’ (Single A minus/A two). Medium to long term rating of ‘A-’ indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on April 19, 2024.
TTE, incorporated in 2019, is a joint venture between Tecno Pack Telecom (Private) Limited (the Holding Company) and Transsion Technology Limited (TTL). The Company’s main area of operations is manufacturing, development and designing of mobile phones, telecommunication & electronic goods and accessories. The registered office and manufacturing facilities of the Company are located in Karachi.
The experience and global presence of TTL, a leading Chinese mobile manufacturer, is incorporated in the ratings. Moderate competition among top players, with most market share held by key players, and low regulatory risk contribute to the industry's overall risk profile. Duty protection in the form of additional customs and regulatory duties provides price advantage to local players.
The assigned ratings take into account medium business risk of manufacturers having Transsion brands – Infinix, Tecno and Itel, with low to mid-range price points. Sales recovered significantly in FY24 from the previous year and settled in the ongoing year. Profit margins contracted during the period under review, leading to weakened debt servicing ratios. Moreover, debt leverage increased remained high due to a combination of higher borrowings and trade payables. However, financial risk is partially mitigated by maintenance of substantial cash balances, thereby resulting in improvement in net gearing by end-1HFY25. The management is engaged in addressing shrinking profit margins by implementing cost-reduction measures and leveraging the favorable environment of declining interest rates.
Looking ahead, timely alleviation of demand rationalization impact on off take, and improvement in lower profit margins and cash flows will be important factors from the ratings perspective.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf