Press Release

VIS Reaffirms Ratings of Shifa International Hospitals Limited

Karachi, November 24, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Shifa International Hospitals Limited (Shifa) at ‘AA-/A-1’ (Double A Minus /A-One). The medium to long-term rating of ‘AA-’ denotes high credit quality coupled with strong protection factors. Moreover, risk factors may vary slightly with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on November 06, 2019.

The assigned ratings take into consideration the clinical reputation of Shifa as a large private healthcare organization within northern region of the country and ample experience of senior management team. The ratings draw comfort from Shifa’s unique positioning, vis-à-vis other large hospitals, as an integrated health system providing primary, secondary, tertiary and quaternary healthcare services with the hospital specializing in high acuity cases. The ratings also factor in broad services array and scale of operations as well as significant expansion plans, including establishment of large-scale hospital and medical center in Faisalabad, Sialkot, and Islamabad. The company has expanded its outreach through its related party Shifa Integrated Health Technology (E-shifa) - a JCI accredited home health service. COVID-19 testing is also being done at Shifa.

The ratings draw comfort from the limited demand cyclicality in healthcare services sector and growing demographic trends of Pakistan. Deficit of human capital in the industry is considered a business risk factor. Underpinned by growing demand for healthcare services, the company has generated sustainable revenue growth on a timeline basis. However, growth momentum of the company has recently been somewhat disrupted due to the outbreak of COVID-19, following ban regarding treatment of OPD patients though the impact was partially offset by incremental revenue from COVID-19 testing. Lower revenue vis-à-vis projections coupled with significantly higher financial charges led to decrease in profits and cash flows generation during FY20; the company has shown improvement in cash flows during 1QFY21. Going forward, debt service coverage is projected to decrease, albeit Shifa’s capacity to timely meet its financial obligations is expected to remain adequate. The ratings also incorporate Shifa’s sound cash position and manageable leverage despite increasing debt levels.

For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (Ext. 201) or email at info@vis.com.pk





Faryal Faheem Ahmed
Deputy CEO

VIS Entity Rating Criteria: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx

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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .