Press Release

JCR-VIS Reaffirms Ratings of Allied Rental Modaraba

Karachi, October 2, 2017: JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Allied Rental Modaraba (ARM) at ‘A+/A-1’ (Single A Plus/A-One). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 28, 2015.

Allied Rental Modaraba (ARM) is managed by Allied Engineering Management Company (Private) Limited, a wholly owned subsidiary of Allied Engineering & Services (Private) Limited (AESL). Ratings continue to derive strength from the prominent position ARM enjoys in the equipment rental market, sound management and financial profile. It also has a service and maintenance arrangement with AESL, which is the authorized dealer for Caterpillar products in Pakistan.

Current ratings take into account growth in revenues and profitability on the back of increase in operating assets. Given that concentration in revenues is high, management made efforts in diversifying its revenue streams. In line with its diversification strategy, the company enhanced focus on the logistics and construction business; management foresees demand for construction machineries increase in the coming years. Deployment level of rental fleet and revenues from logistics and construction projects will remain key drivers for future profitability.

Liquidity profile is considered strong in view of the healthy cash flow from operations. With stable internal capital generation, capitalization levels have strengthened over the years resulting in low leverage. Going forward, further expansion in operating assets is planned; management believes that a significant amount of additional debt will not be required given that liquidity will be generated from settling of its outstanding receivables and through issue of right shares. Keeping in view robust cash flows of ARM, ability to maintain leverage at moderate levels while pursuing growth related objectives will remain important.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 35311861-70 (10 lines) or fax to 35311873.


Javed Callea
Advisor

Applicable Rating Criteria: Modaraba Rating Scale October 2002
http://www.jcrvis.com.pk/images/JCR-Mod.pdf

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