Lahore, December 29, 2017 (PPI-OT):The ratings reflect PNSC’s strong ownership – majority owned by Government of Pakistan – and its strategic significance as the country’s flag carrier. On a stand-alone basis, PNSC’s business profile has gained significant strength in recent years as exhibited by continuous improvement in business margins on account of efficient fleet utilization, better pricing strategy, and cost management measures taken by the management. The company is currently catering increasing business volumes through chartered-hire vessels. Considering the volatility in margins, the company aims to increase its own fleet size by acquiring two vessels – Aframax and Long-range I. The expansion also includes acquisition of two ferries. These expansions are expected to result in improved revenue base and higher margins, in turn, further fortification in business profile of the company.
The acquisition of new vessels would be majorly financed through debt; thus higher leveraging. This would burden the financial profile; however, improving cash flows from existing business coupled with expectation of additional high margin business to be catered by new vessels is likely to generate commensurate cash flows to support debt service coverages. This, along-with on-balance sheet liquidity, supports overall risk profile of the company. Government’s decision to cut furnace oil imports can have seasonal impact on the company’s revenues, though annual revenues are expected to remain intact.
The ratings are dependent on the Corporation’s ability to generate envisaged cash flows post-expansion. Meanwhile, proactive management of financial profile while improving coverages remains important.
For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425