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VIS Assigns Initial Entity Ratings to Transsion Tecno Electronics (Private) Limited

Karachi, August 29, 2022 (PPI-OT):VIS Credit Rating Company Limited has assigned an initial entity ratings of ‘BBB+/A-2’ (Triple B Plus /A-Two) to Transsion Tecno Electronics (Pvt) Limited (‘TTE’ or ‘the Company’). The long term rating of ‘BBB+’ signifies adequate credit quality with reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.

Incorporated in 2019, TTE is a joint venture between Tecno Pack Telecom (Private) Limited (The Holding Company) and Transsion Technology Limited. Lately, TTE has emerged as a significant player in the smart phone industry with a wide range of products at competitive prices. The Company presently is undertaking toll manufacturing for 3 mobile phone brands namely Infinix, Tecno and Itel in the local market. TTE has 2 factories situated in Korangi Industrial Area, Karachi while its corporate office is located at PECHS Block 6, Karachi.

The assigned ratings incorporate TTE’s strong sponsors profile including Tecno Group and Transsion Technology (China). The Company’s business risk profile is supported by TTE’s limited role as a toll manufacturing facility for Transsion Technology Limited (China) for assembling Semi-Knocked Down (SKD) units against a fixed commission on every smartphone while marketing, selling and finance cost burden is incurred by Transsion Technology. Ratings also consider positive demand dynamics of the smart phones sector given the growth of cellular subscribers in the country and TTE’s dominant market positioning.

The rating also considers TTE’s conservative financial risk profile, as reflected by its debt free balance sheet (barring a small lease liability). The Company has minimal gearing, which will continue to drop during the rating horizon. Overall, capitalization indicators are comfortably low from a rating purview. Ratings also take into account an efficient cash conversion cycle, which is reflective of Company’s overall operational efficiency. The assigned rating incorporates sound cash flow coverage indicators and conservative debt projections, going forward. The ratings remain dependent on maintenance of business and financial risk metrics in line with threshold for the assigned rating.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/