Press Release

VIS Reaffirms Entity Ratings of Muhammad Munir Muhammad Ahmad Khanani Securities

Karachi, March 28, 2024: VIS Credit Rating Company Ltd. (VIS) has reaffirmed entity ratings of Mohammad Munir Mohammad Ahmad Khanani Securities (‘MMMK’ or ‘the Company’) at ‘A-/A-2’ (Single A Minus/A-Two). Long term rating of ‘A-’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short term rating of ‘A-2’ depicts good certainty of timely payment where liquidity factors are sound and good access to capital markets. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on November 7, 2022.

Muhammad Munir Muhammad Ahmed Khanani Securities Limited is an unlisted public limited company, principally engaged in provision of equity and commodity brokerage services to retail and institutional clients, along with underwriting and corporate advisory services. Major shareholding is vested with the Mr. Muhammad Munir. The Company operates through its offices in Karachi, Lahore, Hyderabad and Islamabad. The company holds a Trading Right Entitlement Certificate (TREC) for Trading & Self Clearing services issued by the Pakistan Stock Exchange Limited (PSX). The Company serves a diverse clientele, including domestic and international retail investors, high net worth individuals, and local institutions.

Assigned ratings reflect MMMK’s sizeable market share coupled with its extensive branch network. Large and growing retail customer base, underscores its competitive advantage, further highlighted by its top 10 ranking for new customer acquisitions and increasing online client engagement. Assessment of financial profile reflects improvement in profitability profile in FY23 after posting a sizeable loss last year on the back of unrealized loss on investment portfolio. Operational efficiency in FY23 was impacted due to inflationary pressures and provision allowance against expected credit losses, leading to a decline in the cost-to-income ratio. In the current year, buoyed by increased market volumes, core revenues have risen, resulting in a significant uptick in core profitability as well as realized and unrealized gains on investments.

MMMK maintains a sizable proprietary book, which exposes the Company to higher market risk. Market movement and corresponding gains and losses has resulted in volatility in profitability over time. Liquidity profile of the Company is considered adequate. Buildup in trade debts has improved, albeit remain on the higher side. Ratings also incorporate sound capitalization profile of the Company with low gearing and leverage on the back of a relatively large equity base. Retention of profitability in the Company over the years is reflective in the strong equity base, which despite declining last year due to losses, increased to ~Rs 3b at end Dec 2023. With improved market activity in the current year, we expect some build up in gearing and leverage, although the same will remain within manageable levels against corresponding projected equity growth. Going forward, maintenance of capitalization profile and managing market risk appropriately 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 .