The Pakistan Credit Rating Agency Limited
28-Dec-18
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Criteria | Rating Modifier | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
- Methodology | Holding Company | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Dawood Hercules Corporation Limited
| Rating Type | Entity | |
|
Current (28-Dec-18 ) |
Previous (28-Jun-18 ) |
|
| Action | Maintain | Upgrade |
| Long Term | AA | AA |
| Short Term | A1+ | A1+ |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings signify Dawood Hercules Corporation Limited's (DH Corp) strong risk profile as an InvestCo. DH Corp is currently transforming its investment portfolio and has taken an exit from the energy sector (Hub Power Company Limited), which has materialized into healthy gains. The proceeds from the divestment of HUBCO investment have been placed in money market instruments. DH Corp is no longer pursuing the transaction to acquire 45% equity stake in Edotco Pakistan (Private) Limited. The Company is in the process of evaluating new investment opportunities including in the technology sector. Meanwhile, DH Corp is expected to have a steady, indeed increasing, dividend stream from Engro Corp. The business acumen of the sponsoring family and strong governance practices provide support to the ratings.
The ratings require upholding strong overall risk profile. The Company enjoys sizeable liquid funds from divestiture in HUBCO, giving it ample cushion for debt servicing. At the same time, the management's commitment to maintain existing debt levels and coverages would be critical.
About
the Entity
Dawood Hercules Corporation is a public listed company incorporated in 1968. The principal activity of the Company is to manage investments in its subsidiary and associated companies. Dawood Group (Dawood Family and associates) holds a 34% stake in DH Corp through its corporate (20%) and individuals (14%). 54% shareholding is held by other related foreign companies. The BoD is chaired by Mr Hussain Dawood, the patriarch of Dawood family. Mr. Inam-Ur-Rehman, is serving as CEO since Dec ’16.