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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Rohail Amjad
rohail.amjad@pacra.com

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

  • Corporate Rating Methodology (Jul 17) [View]

Related Research

  • Sector Study | Electronic Media (Jun 17) [View]
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PACRA Maintains Entity Ratings of HUM Network Limited
 Rating Type Entity
Current
(30-Dec-2017)
Previous
(23-Jun-2017)
 Action Maintain Maintain
 Long Term A+ A+
 Short Term A1 A1
 Outlook Positive Positive
 Rating Watch - -

The ratings mirror HNL's ability to capacity its robust market position in the domestic media industry. HNL enjoys plausible financial profile supported by less leveraged capital structure, well built coverages, and healthy profitability. With strong presence of HUM TV, HNL's flagship channel, in entertainment segment, HNL has aided from increasing advertisement spent in Pakistan. This is evident in turnover growth along with stable margins. To bring variegation in the revenue stream, HNL is expanding its viewership in different geographies and genres. It has entered in to agreements with foreign media players, extending rights to broadcast Hum TV content on their channels/portal. Meanwhile, HNL intends to strengthen the film distribution under the brand of "HUM Films". HNL is also expanding in ancillary domains including publications and holding events. The ratings acknowledges the company's veteran management team, having sound understanding of the industry dynamics and exploiting opportunities .
Positive outlook highlights the company's business initiatives which are likely to strengthen its business profile besides heavy reliance in revenue streams. Moreover, preserving the sound capital structure is important. At the same time, upholding high governance standards would remain important
About the Entity
HNL, listed on PSX, commenced its operations in January 2005. Over the recent period, the company's shareholding has experienced changes. Although sponsoring family continues to have majority stake; it is diluted to 29% (end-Sep17), mainly held by Duraid Qureshi (the CEO). A group of foreign funds, though unrelated, own a significant 18% stake; Ths Kingsway Fund (18%), Stitching General Holdings (13%) and ACACIA Partners LP (10%). The rest (43%) is spread amongst institutions and individuals. HNL board has yet to experience any changes in lieu of changes in ownership structure. This is curtail from rating point of view. The board comprises nine members including five from sponsoring family, one independent and one non- executive director. From five sponsoring family directors, three are non-executive while the remaining two hold executive positions - ED (Sultana Siddiqui) and CEO (Duraid Qureshi). The management team of the company comprises well-qualified and seasoned professionals of the media industry. The CEO and the ED have extensive experience in television production and media marketing.
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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