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The Pakistan Credit Rating Agency Limited

Date
22-Dec-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Ahmed Sheikh
ahmed.sheikh@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Corporate Rating Methodology (Jul 17) [View]
  • Methodology | Asset Manager Rating (May 17) [View]

Related Research

  • Sector Study | Asset Management (Apr 17) [View]
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PACRA Maintains Entity Ratings of JS Investments Limited
 Rating Type Entity
Current
(22-Dec-2017)
Previous
(23-Jun-2017)
 Action Maintain Maintain
 Long Term A+ A+
 Short Term A1 A1
 Outlook Stable Stable
 Rating Watch - -

The ratings reflect JSIL's strong risk absorption capacity emanating from sound equity base and a debt free capital structure. The rating incorporates JSIL’s association with a strong commercial bank (JS Bank Limited) and Jahangir Siddiqui Company Limited which is the holding company of the underlying company. Lately the company has managed to improve its AUMs and stabilize the revenue stream. During the year Mr. Hasnain Raza Nensey took the leader ship role as CEO of the company. The new management has embarked upon a plan to beef up its system share by increasing the AUM base by collaborating with JS Bank. Integration into the parent bank (JS Bank) may support the company's intrinsic growth plans. To achieve this strategy, the company has developed products that will be beneficial for bank to sell. The company also plans to focus on SMA segment to capture the growing demand from provident and endowment funds. Furthermore, the company devices to focus on retail clients and to revive significant number of inactive accounts.The success of these initiatives is crucial though the desired outcome may stretch over a longer horizon. The company's strong financial position permits gradual advancement towards its target.

The ratings remain dependent, alongside a debt-free capital structure, upon management's ability to effectively execute its business strategy for growth in AUMs, in turn, augmenting competitive positioning in the industry. Herein, the challenge would be diversity of funds including contribution from the retail segment along with sustained improvement in fund's performance. The company enjoys low financial risk due to deleveraged structure; any debt acquisition should be planned carefully.
About the Entity
Incorporated in 1995 and listed on PSX since April 24, 2007, JS Investments Limited (JSIL) is a private sector asset management company in Pakistan. JSIL is a subsidiary of JS Bank Limited - 65% shareholding at end-Dec16. JS Bank, in operations since December 2006, has a country-wide network of 307 branches (at end-Dec16). It carries a long-term rating of "AA-" and short-term rating of "A1+" by PACRA. The company has recently launched six new fund of funds schemes. JSIL is managing 16 open-end mutual funds and 2 pension schemes with collective AUMs of PKR 12,629mln at end-Sep-17. The company also manages SMAs mandates amounting to PKR 1,024mln at end-Mar17.

JSIL's board of directors comprises eight members - including CEO. The board structure include two group representatives, four representatives of the sponsoring bank and an independent director. Company witnessed changes in the key management positons. Mr. Hasnain Raza Nensey, was appointed as CEO in March 2017. He has an aggregate work experience of 23 years. Prior to joining JSIL, he spent 11 years at UBL Fund Managers Ltd in multiple capacities, lastly as Chief Operating Officer. He's supported by the team of diversified experience in the capital market.
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.
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