PACRA Maintains Entity Ratings of Sapphire Fibres Limited - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- May 24, 2019 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

Quote

The ratings reflect Sapphire Fibres Limited's (Sapphire Fibres) established business profile emanating from strong presence in the broader value-chain; enabling the company to manage volatility in the textile industry. Business profile has improved since diversification into the denim segment in FY17, where optimal capacity utilization has led to strong revenue growth and improved margins. During 9MFY19, currency devaluation led to significant growth in the Company's export-oriented topline.

A sizable investment book (PKR ~12bln, 76% of equity) built over the years by deploying surplus funds augments the company's profile and has generated a steady stream of recurring non-core income, supplementing its bottom-line in the past. Recent economic conditions and volatility in the stock market diminished portfolio performance and ensuing income.

Although the Company's investment portfolio comprises blue-chip stocks, rising interest cost and subdued performance of stock market is likely to put pressure on investment income. Financial risk of the company is stretched in the absence of non-core income to support core...