Press Release

VIS Maintains Entity Ratings of Intermarket Securities Limited

Karachi, August 13, 2024: VIS Credit Rating Company Ltd. (VIS) has maintained the entity ratings of Intermarket Securities (‘IMS’ or ‘the Company’) at ‘A-/A-2’ (Single A minus/A-Two). The long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate meanwhile risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Access to capital markets is good along with small risk factors. The ratings have been placed on ‘Rating Watch - Developing’ status. Previous rating action was announced on February 03, 2023.

IMS is primarily engaged in provision of equity brokerage services, catering to domestic retail and high net worth (HNWI) clients, local institutions and foreign broker-dealers. IMS is registered with Securities & Exchange Commission of Pakistan and holds Trading Rights Entitlement Certificate (TREC) issued by Pakistan Stock Exchange Limited (PSX). External auditors of the Company are Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants, who are in the Category ‘A’ of State Bank of Pakistan’s list of auditors.

Placement of ratings under ‘Rating Watch – Developing’ is on account of impending merger of the Company with and into EFG Hermes Pakistan Limited. with the latter remaining as the surviving entity. EFG Hermes is a listed entity which has been involved in brokerage business since September 1999. As per the Scheme of Arrangement, the agreed swap ratio for the transaction is 2.16:1, where for every one share of IMS, EFG will issue 2.16 shares to IMS shareholders. This has been duly approved by Securities & Exchange Commission of Pakistan (SECP) and Competition Commission of Pakistan (CCP) and now awaiting Court approvals. VIS will review the ratings once the merger becomes effective.

Ratings take into account the market position of the Company, driven by higher volumes, driven by increased number of clients. Going forward, the Company is anticipating further increase in its market share following the merger with EFG Hermes. Assessment of financial profile reflects improvement in profitability profile During 9MFY24, the Company recorded higher earnings, driven mainly by an uptick in brokerage revenue together with growth in margin financing as well as dividend income. Nevertheless, brokerage revenues continued to dominate the revenue mix. Operational efficiency also depicted improvement, although still remaining on the higher side. Liquidity profile of the Company remains satisfactory. Market risk exposure is elevated owing to increase in short term investments. Gearing and leverage indicators have increased, however, they remain within reasonable levels. Going forward, diversifying revenue streams along with improvement in the liquidity and market risk as well as maintenance of capitalization profile will remain important for ratings.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.

Applicable Rating Criteria: Securities Firms:
https://docs.vis.com.pk/docs/SecuritiesFirm202007.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 .