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The Pakistan Credit Rating Agency Limited
Press Release

Date
26-Dec-19

Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Alfalah CLSA Securities (Pvt.) Limited

Rating Type Entity
Current
(26-Dec-19)
Previous
(28-Jun-19)
Action Maintain Maintain
Long Term A- A-
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The Ratings reflect the Company's ability to retain its market share in lackluster equity market. The company is expected to benefit from its association with CLSA -a wholly owned subsidiary of CITIC Securities, the largest investment bank in China- who acquired 24.9% stake in the company, especially for international exposure and business. The performance of the company has been under pressure recently due to lower volumes and trading activity in the market, resulting in net losses. However, the recent up surge in volumes in equity market is expected to stem this trend. The company strengthened its equity base with fund injection from CLSA and significantly reduced its leveraging. This has improved financial indicators and will reduce finance cost. The company has adequate level of capitalization with Net Capital Balance of ~PKR 154 mln, whereas Net Equity as at end Jun'19 stood at ~PKR 245 mln (Dec'18 ~PKR 134 mln).
The rating is dependent on the company's ability to leverage its association with CLSA and improve revenues and profitability. Financial Performance, Retention of key human resources and continuous risk monitoring will bode well for the Company. Sustained trend of losses resulting in equity erosion, and/or excessive leveraging will have negative rating implication.

About the Entity
Alfalah CLSA Securities (Pvt.) Limited is a financial services company, licensed as securities broker under Securities Brokers (Licensing and Operations) Regulations, 2016. The company is engaged in equity trading. The company also provides investment banking & advisory services. Alfalah Securities operates from Head office based in Karachi, Pakistan. It is a subsidiary of Bank Alfalah Limited. The bank owns ~62% stake in Alfalah Securities. CLSA now holds ~24.9% stake in the company. The remaining shareholding lies with the company's Chairman Mr. Aliuddin Ansari and the CEO Mr. Atif M. Khan. CLSA is a 100% owned subsidiary of CITIC Securities, the largest investment bank in China. As the international platform of CITIC Securities, China’s leading investment bank, CLSA is uniquely positioned to facilitate cross-border capital flows and connect China with the world and the world to China. Founded in 1986 and headquartered in Hong Kong, CLSA’s global network spans 22 locations across Asia, Australia, Europe and the United States.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.