Karachi, November 18, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Agility Logistics (Pvt.) Limited (ALPL) at ‘A/A-2’ (Single A/A- Two). The medium to long-term rating of ‘A’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely repayment, sound liquidity factors and good company’s fundamentals. The rating has been placed under ‘Rating Watch-Developing’ status. Previous rating action was announced on December 24, 2020.
The ‘Rating Watch-Developing’ status is reflective of the acquisition of Agility’s Global Integrated Logistics business by DSV Panalpine A/S. The company is currently under the country-wise integration process whereby freight, forwarding and handling business of ALPL will be transferred to DSV in Pakistan over the next six months. Post integration, ALPL’s business mix shall largely comprise distribution sales followed by warehousing business. Management expects growth in these segments to off-set the impact of loss of freight and forwarding business segment, though the same may take some time given that the business segment planned to be transferred comprised around 40% of top line.
Assigned ratings to ALPL incorporate strong sponsor profile and demonstrated track record of support of Agility Group who have a global presence and are amongst the leading logistics and supply chain players in the Middle East. Business risk profile has drawn support from diversified nature of operations and revenue stream and strong client base primarily comprising MNCs (including sticky global relationships) and large local corporates. However, revenues remain exposed to macroeconomic volatility while overall customer concentration is on the higher side. Comfort is drawn from high customer retention, lengthy association with most clients and continuous addition of new clients.
During the review period, cost rationalization initiatives and lower finance cost supported overall profitability that continued to remain modest due to thin margins and high effective tax rate. Overall bottom-line of the company will be affected by completion of transfer of higher margin earning freight and forwarding business, going forward. Liquidity profile of the company is considered adequate given sufficient cash flow coverage of outstanding obligations. Conversion of long-term loan to equity and reversal of accrued markup (realized in 2021) has strengthened capitalization indicators. Overall corporate governance infrastructure is considered sound and is supported by a well-designed organizational structure and clear reporting lines, solid IT platform and documented policy and procedural framework.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/