Lahore, September 15, 2022 (PPI-OT):Malik MIJ Chunxing Resources Recycling Co. Limited (MMC or ‘the Company’) ratings reflect a leading business profile and strong presence in the field of recycling and disposal of used lead acid batteries, lead plates, lead paste, lead powder and manufacturing and sale of bullion and refined lead. The Company is dedicated to provide most comprehensive solutions for effective utilization of Used Lead Acid Batteries (ULAB) across Pakistan and aims to produce 99.98% refined “Green Lead”. The local lead recycling business is fragmented and the Company faces competition with a large unorganized segment.
The ratings take comfort as the joint venture company (MMC) has a strategy and technical alliance with local partners and foreign companies. One of the foreign sponsoring companies Jiangsu New Chunxing Resource Recycling Co. Ltd has experience of 4 decades in producing and refining secondary lead and possesses patented recycling technology. The other foreign sponsor is MIJ International Dmcc a leading global metal merchant focusing on trading, processing, and production of ferrous and non-ferrous metals. The demand for recycled lead primarily comes from the batteries segment and its consumption is directly linked with the performance of automobile sector.
Secondary demand comes from portable industrial and household energy backup solutions. Capacity utilization is gradually pacing up and the Company has appropriate long-term plans to enhance the production capacity accordingly. Going forward the Company is focusing to capitalize on revenue growth from exports by leveraging in-house highly refined lead recycling capabilities. The board of the company is divided among experienced sponsors who have diversified portfolios in the same industry.
The Company is benefitting from adequate systems of internal controls as these are also monitored by the foreign sponsoring companies separately. The financial risk profile of the Company is considered adequate, with comfortable coverages, cashflows, and working capital cycle. Capital structure is leveraged with modest equity and borrowings are comprised of long-term and short-term.
The Company has also borrowed in foreign currency thus exposed to foreign exchange risks. The Company follows a consistent debt policy, which is likely to continue in future as well also depicted in future financial projections. The ratings are dependent on upheld sustainable profits and market share while retaining sufficient cash flows and coverages. However, adherence to maintaining its debt metrics at an adequate level is a prerequisite.
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