Press Release
VIS Reaffirms Entity Ratings of Javedan Corporation Limited
Karachi, October 09, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Javedan Corporation Limited (‘JCL’ or the ‘Company’) at ‘A+/A-1’ (‘Single A Plus/A-One’). 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’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings remains ‘Stable’. Previous rating action was announced on July 27, 2023. Rating of Sukuk has also been reaffirmed at ‘AA-’.
Javedan Corporation Limited was incorporated in Pakistan on June 08, 1961, as a public limited company under the repealed Companies Act, 1913 (now Companies Act, 2017) and is listed on Pakistan Stock Exchange Limited. The registered office of the Company is located at Arif Habib Centre, 23, M.T Khan Road, Karachi. The Company has ceased its cement business since July 01, 2010 and the management has developed business diversification strategy for utilizing the Company’s land having area of 1,367 acres for developing a housing scheme, “Naya Nazimabad”, that includes bungalows, open plots, flat sites and commercial sites.
The assigned rating incorporates support from JCL’s sponsor, the Arif Habib Group. JCL’s business risk profile reflects its exposure to the cyclical nature of the real estate and construction industries, which are influenced by economic and political factors, fluctuations in purchasing power, volatility in raw material prices, and competitive pressures. The assessment also considers the Company’s well-established brand and its sizeable land holdings.
The Company’s financial risk profile is dependent upon revenues which are primarily driven by land sales. Revenue growth was notable in FY23, particularly through Real Estate Investment Trust (REIT) structures, but has normalized in FY24. Margins have improved due to rising property values. However, moving forward, sustaining revenue and margins amidst evolving market conditions will be key rating drivers.
Capitalization levels remain manageable, depicting equity growth and a reduction in leverage, on account of internal profit generation. Liquidity management remains important due to inherent volatility in real estate cash flows. Thus, maintaining adequate debt servicing coverage will be important going forward. Ratings remain underpinned on achievement of management outlook regarding growth, continued support of sponsors for debt service coverage, if needed, retention of profitability and availability of working capital lines as planned.
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
Construction Industry
https://docs.vis.com.pk/Methodologies%202024/CONSTRUCTION-INDUSTRY-RATING-CRITERIA.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf
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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .