PACRA Maintains Entity Ratings of Alfalah CLSA Securities (Private) Limited.
The ratings incorporate the Company’s association with a renowned international brand, CLSA (~25% stake holder), the largest investment bank in China backed by CITIC Securities along with Bank Alfalah (~61% stake holder) the leading bank in Pakistan. The Company has sound governance framework, well experienced management team, and well established compliance protocols which bodes well for the rating. The Company has a distinct position in international brokerage income, constituting ~24% of its total brokerage revenue (CY19: ~35%) which illustrate competitive advantage over peers. The topline of the Company, commensurate with trading volumes of stock exchange index, reflected an upturn and rose by ~92% YoY. The average traded volumes during CY20 registered an upward trajectory and improved by ~95% to ~209mln shares (CY19: ~107mln) depicting an increased participation in the equity market led by increasing investor confidence in the country’s economic rebound and the global COVID-19 vaccine rollout. The bottom-line of the Company also improved to ~PKR 29mln profit (CY19: ~PKR 34mln loss) and the Company maintained its market share at 3%. The Company's financial profile is characterized by strong risk absorption capacity owing to its strong liquidity profile. During CY20, utilization of short term borrowing lines significantly reduced to ~24% against 73% in CY19, which shows company's low reliance on short term lines owing to better working capital management and healthy cash flows. The Company does not have a proprietary trading portfolio, limiting its market risk exposure. The Company has adequate capitalization level with Net Capital Balance of ~PKR 137mln, whereas Net Equity as at Dec-20 stood at ~PKR 277mln (CY19: ~PKR 238mln). The Company's strong ownership remains a key rating factor.
The rating is dependent on the Company's ability to leverage its association with CLSA to attract foreign investors. Maintaining a strong financial profile and retention of key human resources remains important. Meanwhile, improving profitability and maintaining market share is critical.
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 ~61% 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.