The Pakistan Credit Rating Agency Limited
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Maryam Arshad

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PACRA maintains Entity Ratings of HUM Network Limited, assigns ‘Stable’ Outlook

Rating Type Entity
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Developing
Rating Watch Yes Yes

The ratings incorporate HUM Network's ability to uphold its relative market position within the media industry. With an appreciable presence of HUM TV – the Company’s flagship channel in entertainment segment, the Company has expanded into multiple TV ventures on a timeline basis including Hum Masala, Hum Sitaray and Hum News. The Company was affected due to curtailed media spending by corporates and government. However, the Company took measurable steps to manage its costs. This coupled with the cash outflows pertaining to the launch of Hum News channel and impairment losses related to investments in new business venture, led to deteriorated bottom-line performance in last few years however; as the economic activity picked up, media industry has reflected improvement in its performance. The ratings take into account the improved margins and profitability of the Company, as well as on-balance sheet liquidity to continue supporting the overall risk profile of the Company. The decreased outstanding debt amount is also beneficial moving forward, supporting the financial matrix of the entity. With a view to sustainable diversified revenue streams, management is building upon various revenue segments including the growing ‘Subscription Income’ component as well as development of Hum News. In lieu of aforementioned factors improving, the ‘Developing’ Outlook has been modified to ‘Stable’ Outlook.
The Rating Watch captures the instability on the board structure as the Company was unable to hold its Annual General Meeting due to legal proceedings pertaining to the election of directors. Upon clarification from SECP, which permitted the current board to carry out their duties that turned out into holding of AGM, followed by dissemination of financial statements, however the proceedings are at this moment ongoing. In furtherance to the abovementioned, there is change in the horizon pertaining to shareholding as recent letter of intent expressed by the CEO and sponsoring family member – Mr. Duraid Qureshi, to increase stake within the Company. PACRA will closely monitor the situation going forward and consider the ratings accordingly.
The ratings are dependent upon sustained business profile of the Company. Improvement in financial risk profile is vital. Recurring downturn in the bottom line would have an adverse impact on the credit rating of the Company in the future.

About the Entity
HUM Network Limited, listed on Pakistan Stock Exchange, commenced its operations in January 2005. Shares of the Sponsoring family equate to (~29%) - Mr. Duraid Qureshi (~24%) and Mr. Shunaid Qureshi (~5%). The Company is one of the largest media houses of Pakistan that has a diversified portfolio of business. Mr. Duraid Qureshi is the CEO of the Company. He is supported by a team of experienced professionals.

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.