Lahore, July 12, 2021 (PPI-OT):The assigned rating of Cedar Capital (Pvt.) Limited (“CCPL” or the “Company”) incorporates adequate ownership structure, satisfactory regulatory framework, sound internal controls and strong business acumen of sponsor. CCPL has a well-defined organizational hierarchy where the responsibilities and reporting lines are logically structured. The assigned rating takes into account a sound IT infrastructure supported by clearly defined IT, disaster recovery and back-up policy. CCPL provides prudent services to its clients in the form of complaint management, access to technical and fundamental reports and a dynamic reporting mechanism.

CCPL primarily provides the services of equity brokerage, wherein CCPL has competitive institutional clientele; however, limitation in revenue diversification exists. Further, governance framework is adequate as room for improvement exits on independent insight. The ratings also incorporate CCPL’s low leveraged capital structure supported by sponsor’s loan. CCPL has closed its proprietary book to reduce the volatility in profits, hence less exposed to market risk. The Company has a reasonable capitalization level with regulatory Net Capital Balance (NCB) standing at PKR 248mln at end-Mar’21. CCPL may have asset under custody of up to 25x of net worth.

The ratings would remain dependent on the management’s ability to strengthen revenue base by augmenting consultancy and advisory services. Retaining market share and sustaining profitability from core operations remain critical. Meanwhile, upholding strong internal controls and diligent monitoring of risks is important.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com