Press Release

VIS Upgrades Entity Ratings of Adam Securities Limited

Karachi, February 18, 2020: VIS Credit Rating Company Ltd. (VIS) has upgraded entity ratings of Adam Securities Limited (ASL) to ‘BBB+/A-2’ (Triple B Plus/A-Two) from ‘BBB/A-3’ (Triple B /A-Three). The long term rating of ‘BBB+’ signifies adequate credit quality with reasonable protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on July 26, 2019.

Change in ratings assigned to ASL reflects the management’s focus on diversifying its revenue stream through corporate finance advisory along with brokerage. ASL continues to maintain a significant market share of 11% vis-à-vis other industry players. However, the same has not translated into high brokerage commission earnings given proprietary trading being higher than share turnover for clients; brokerage industry continues to be affected by economic cycles. Nonetheless, management expects the top line to improve on the back of standardized commission rates across the industry as disclosed by the regulator.

Despite a lower share turnover, the company reported a higher bottom line on account of higher capital gains on its proprietary book coupled with a lower taxation cost. As a result, capitalization indicators have strengthened on a timeline basis and compare favorably to peers. Liquidity and leverage indicators remain within manageable limits. Ratings also incorporate improvement in the corporate governance framework with the appointment of an independent director.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Ms. Muniba Abdullah, CFA (Ext: 215) at 021-35311861-70 or fax to 021-35311873 or

Javed Callea

Applicable Rating Criteria: Securities Firms Rating (June 2017)

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