Press Release
VIS Assigns Initial Entity Ratings to Maple Leaf Capital Limited
Karachi, December 21, 2023: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-1’ (Single A Minus/A-One) to Maple Leaf Capital Limited (MLCL). The 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 ‘A-1’ denotes high certainty of timely payments; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’.
Incorporated in 2014, MLCL operates as a subsidiary of Kohinoor Textile Mills Limited (KTML), which owns an 82.92% equity stake in it. MLCL is part of the Kohinoor Maple Leaf Group, a leading industrial conglomerate having presence across diversified sectors including cement, textiles, power, and capital markets. MLCL operates as an investment management company, primarily established to invest the Group’s capital in financial instruments and commodities. Shareholding is held by KTML and members of the sponsoring group, who actively participate in the Company’s operations. The Board of Directors consists of seven members, including the Chairman and CEO, with the remaining members serving as non-executive directors. The senior management team depicts stability and comprises seasoned professionals with extensive experience in business, risk management, financial planning, equity management, and equity investment.
MLCL investment strategy, guided by an investment policy statement (IPS) and overseen by the Investment Committee, seeks to generate income primarily through capital gains, dividends, and interest income on diversified assets. MLCL’s investment portfolio includes both long-term and short-term investments, with a cautious reduction in related-party exposure. The company's investment portfolio and assets are predominantly composed of short-term investments, accounting for over 90% of its total mix. Long-term investments include equity investments in various startup companies, with a major focus on e-commerce and technology solutions. Whereas, short-term investments largely comprised public listed stocks. Market risk emanating from this portfolio was on a higher side due to high concentration at sector and script level as of Jun 30, 2023. Given challenges in FY22, including macroeconomic issues and political instability leading to lackluster stock market performance and subsequent impact on company’s profitability, there has been recovery in FY23, with return on portfolio outperforming benchmark KIBOR rate. Post June, 2023, the management has undertaken a diversification strategy to mitigate market risk and enhance profitability, with a shift towards dividend yielding stocks. With KSE-100 index showing positive trends, MLCL anticipated improved profitability metrics. In addition, the company maintains a strong liquidity position, sound capitalization and prudent leverage, further supported by commitment of group companies to provide funds to bolster investment operations. Meanwhile, the ratings are constrained by the inherent market risk of equity investment and market volatility in an emerging stock exchange market. The ratings are dependent upon planned diversification of market risk and focus on dividend yields with maintenance of capitalization indicators.
For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-12 (Ext. 8005) and/or the undersigned at 021-35311861-64 (Ext. 207) or email at info@vis.com.pk.
Javed Callea
Advisor
Applicable Rating Criteria:
VIS Rating Criteria: Industrial Corporates (May 2023)
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf