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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2016
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Mohsin Naseer
mohsin.naseer@pacra.com

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

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]
  • Correlation between Long-term and Short-term rating (Jun 16) [View]

Related Research

  • Sector Study | Hotels & Retail Industry (Mar 16) [View]
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PACRA Maintains Entity Ratings of Nishat Hotels and Properties Ltd
 Rating Type Entity
Current
(30-Dec-2016)
Previous
(31-Dec-2015)
 Action Maintain Maintain
 Long Term A- A-
 Short Term A2 A2
 Outlook Stable Stable
 Rating Watch - -

Nishat Group, through NHPL, has set up a multi-purpose commercial complex (Nishat Emporium), comprising a state of art shopping mall, a luxury hotel, and banquet halls. The ratings reflects the successful launch of the mall segment during CY16. Certain modifications and expansion in original design led to some completion delays in the banquet & hotel segment, planned to be inaugurated during 1HCY17. Emporium, while primarily catering to the demand of sprawling population in the neighborhood, is attracting footfall from other parts of the Lahore being the first such facility. With 95% occupancy of the mall segment, the major chunk of revenue is expected to emanate through lease rentals during FY17. The project is being funded with a mix of debt (60%) and equity (40%); the absolute amount of debt has increased. The volumes of secured rentals alongwith the management’s plans to reprocure debt would cover the upcoming debt repayments, resulting in a maintained leveraging for the project. Sustained flow of rentals from the mall segment alongwith incremental flow from banquet and hotel segment would provide support to NHPL’s cashflows, in turn, its coverages.

Given sizeable leveraging, the financial risk profile of the company must be effectively managed. Sponsor association, sponsor’s substantial stake position provides solace to the ratings. While the group has the advantage of managing hotel business, the company needs to develop & maintain requisite HR skill-set for managing such complex.
About the Entity
NHPL is a venture of Nishat Group - the country's leading business group having strong credentials of managing ventures in the textile, cement, energy, hospitality and financial sectors. NHPL is majority owned by Mansha family (90%), the sponsors of Nishat Group. The other shareholder is Allied Bank Limited (10%). NHPL's seven members board of directors comprises four representatives of the sponsoring family alongwith three executives from group companies. Mr. Hasan Mansha, the CEO, is leading power and hospitality ventures of the group.
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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