Press Release

VIS reaffirms ratings of Javedan Corporation Limited

Karachi, March 28, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity rating of Javedan Corporation Limited (JCL) at ‘A+’/A-1 (Single A Plus/A-One). Ratings of Sukuk has also been reaffirmed at AA- (Double A Minus). The assigned ratings to the Sukuk incorporate strong debt servicing ability and structural features of the Sukuk. Long term entity rating of ‘A+’ denotes good credit quality and adequate protection factors; risk factors may vary with possible changes in the economy. The short term rating of ‘A-1’ signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 21, 2020.

The assigned ratings to JCL reflect moderate business risk, strong financial risk profile and implicit support of JCL’s majority shareholder, Arif Habib Group. Assessment of business risk profile takes into account within the city location of the project, security features and amenities on offer. Quality of amenities planned and in place is expected to bode well for future sales. Business risk profile draws support from the sizeable land bank available with the Company, which has significant value. The incentives provided by the government for the construction sector both in terms of construction and concessionary credit for home purchases also bode well for the company.

Financial profile of the company is adequate as evident from manageable leveraged capital structure, strong hidden reserves on balance sheet and strong expected cash flows mainly from Phase- II. With launch of Phase II in November 2021, liquid assets are estimated to be notably higher as of report date. The Company mobilized further long-term debt on its balance sheet during the period under review in order to finance newly launched projects and to support on-going developments. Consequently, the capitalization indicators were elevated; going forward, the gearing levels are expected to remain elevated in FY22 as the Company is planning to take further long-term debt to finance its ongoing and upcoming projects. Nevertheless, gearing will remain aligned with assigned rating threshold. The materialization of the expected cash flow from Phase- II in H2’FY22 and FY23 is considered important from a ratings purview, which VIS will continue to track on an ongoing basis.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Arsal Ayub, CFA (Ext: 216) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

Applicable Rating Criteria: Industrial Corporates - August 2021

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