Lahore, March 15, 2022 (PPI-OT): Aba Ali Habib Securities (Pvt.) Limited (“AAH” or “The Company”) is one of the oldest brokerage houses, established in 1970. The Company is primarily engaged in the provision of equity brokerage services while diversity exist in the form of commodity brokerage, MTS, MFS and IPO distribution. In the near future, the management has planned to enhance the institutional clientele and to venture into the IPO advisory and underwriting business. The management also intends to improve the technological structure for swift on-boarding of retail clientele.

Moreover, geographical diversification is also under consideration to improve client outreach. Financial assessment indicates a notable improvement of ~95% in core income. The boost came on the back of new investors on-boarding and uptick in trading volumes in FY21. On the other hand, notable gains on short-term investments resulted in profit-after-tax of ~PKR 410mln for FY21 (FY20: ~PKR 3mln). The Company has a strong equity base of ~PKR 986mln at end-Jun’21 which provides a cushion against unexpected shocks. The rating takes comfort from a low leveraged capital structure. The Company actively manage its investment book whereby the funds are strategically moved between equity and fixed income avenues based on market expectations.

The market has observed volatility in terms of trading volumes in the recent months which may impact the commission revenue going forward. The rating signifies a strong internal control environment supported by outsourced internal audit, dedicated compliance department and the presence of audit and risk management committees. However, the extent of policies may be enhanced further with the addition of more detailed guidelines. The availability of online trading, mobile-app, complaint system and research department results in a sound client servicing. The assigned rating takes into account a sound ownership structure. The governance framework may be enhanced further with the induction of certified independent directors.

Going forward, improvement in core income, sustainability of market share and profitability and materialization of planned business strategies remains critical. Meanwhile, upholding strong internal controls, sound governance structure, retention of key management personnel and diligent monitoring of risks is important.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com