Karachi: The VIS Credit Rating Company Limited has reaffirmed the entity ratings of Treet Corporation Limited at 'A-/A2', reflecting the company's good credit quality and stable outlook. The ratings denote adequate protection factors and a favorable likelihood of timely repayment of short-term obligations, despite potential economic fluctuations.
According to a statement by VIS Credit Rating Company Limited, the reaffirmation comes after a previous rating action in December 2023. Treet Corporation, established in 1977 and listed on the Pakistan Stock Exchange, is primarily engaged in manufacturing and selling razors and razor blades. The company also diversifies its portfolio with operations in motorbikes, corrugated boxes, soaps, and paper and board production. Its significant investments include substantial shares in subsidiaries like Renacon Pharma Limited and Treet Battery Limited.
The ratings consider Treet's extensive market presence across key sectors, including blades and razors, batteries, and hemodialysis concentrates. These sectors present varying risk levels, with blades and razors facing medium risk, the battery industry facing high to medium risk, and the hemodialysis sector facing low risk but operational challenges. The company's recent establishment of a subsidiary in the United Arab Emirates aims to expand its global distribution and address logistical issues.
Treet's financial profile is marked by increased revenue from domestic sales and new products, although finance costs have impacted net margins. The company's equity base has expanded due to a rights issue, improving its gearing and debt leverage ratios. While liquidity has improved through profit retention and equity issuance, it remains constrained. Debt service coverage remains sound despite elevated financial charges.
Looking ahead, Treet plans to further divest its subsidiary holdings to reduce borrowing and strengthen financial indicators. The company's expansion into new product lines and international markets could alter its business risk profile. However, external cost pressures and competition may continue to affect profitability and liquidity. The company's future ratings will depend on its ability to enhance key financial metrics and navigate these challenges.