PACRA Maintains Entity Ratings of Alfalah CLSA Securities (Private) Limited.
|Rating Type||Broker Management|
Broker Management Rating of Alfalah CLSA Securities (Private) Limited (The Company or Alfalah CLSA) reflect its association with CLSA (24.9% shareholder) - a wholly owned subsidiary of CITIC Securities, the largest investment bank in China. The rating incorporates the Company's strong sponsor support, sound governance framework, seasoned management team, and well established compliance protocols. Alfalah CLSA has matrix organizational structure, with clear reporting lines for respective heads. The Company has established rigorous protocols regarding risk assessment by implementing KYC, CDD, AML, CFT and whistle blowing policies. The IT infrastructure allows full integration of the front and back office functions, allowing generation of real time reports. As a policy, the Company does not take propitiatory exposure, which reduces conflict of interest and minimizes exposure to market risk. 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 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 upon the management's strategy to improve market share and profitability by leveraging its brand. Retention of key human resource and upholding strong controls remain critical for the rating.
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.