The Pakistan Credit Rating Agency Limited
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Muhammad Harris Ghaffar

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PACRA Maintains Entity Ratings of Malik MIJ Chunxing Resources Recycling Company Limited

Rating Type Entity
(15-Sep-22 )
(15-Sep-21 )
Action Maintain Initial
Long Term BBB BBB
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Malik MIJ Chunxing Resources Recycling Co. Limited (MMC or 'the Company') ratings reflect a leading business profile and strong presence in the field of recycling & disposal of used lead acid batteries, lead plates, lead paste, lead powder and manufacturing & sale of bullion and refined lead. The Company is dedicated to provide most comprehensive solutions for effective utilization of Used Lead Acid Batteries (ULAB) across Pakistan and aims to produce 99.98% refined “Green Lead”. The local lead recycling business is fragmented and the Company faces competition with a large unorganized segment. The ratings take comfort as the joint venture company (MMC) has a strategy and technical alliance with local partners and foreign companies. One of the foreign sponsoring companies Jiangsu New Chunxing Resource Recycling Co. Ltd has experience of 4 decades in producing and refining secondary lead and possesses patented recycling technology. The other foreign sponsor is MIJ International Dmcc a leading global metal merchant focusing on trading, processing, and production of ferrous and non-ferrous metals. The demand for recycled lead primarily comes from the batteries segment and its consumption is directly linked with the performance of automobile sector. Secondary demand comes from portable industrial and household energy backup solutions. Capacity utilization is gradually pacing up and the Company has appropriate long-term plans to enhance the production capacity accordingly. Going forward the Company is focusing to capitalize on revenue growth from exports by leveraging in-house highly refined lead recycling capabilities. The board of the company is divided among experienced sponsors who have diversified portfolios in the same industry. The Company is benefitting from adequate systems of internal controls as these are also monitored by the foreign sponsoring companies separately. The financial risk profile of the Company is considered adequate, with comfortable coverages, cashflows, and working capital cycle. Capital structure is leveraged with modest equity and borrowings are comprised of long-term and short-term. The Company has also borrowed in foreign currency thus exposed to foreign exchange risks. The Company follows a consistent debt policy, which is likely to continue in future as well also depicted in future financial projections.
The ratings are dependent on upheld sustainable profits and market share while retaining sufficient cash flows and coverages. However, adherence to maintaining its debt metrics at an adequate level is a prerequisite.

About the Entity
Malik MIJ Chunxing Resources Recycling Co. Limited (MMC or “the Company”) is a public unlisted company. The company’s registered office is in Lahore, and its plant is located in Faisalabad Industrial City. The Company is formed by a joint venture between Jiangsu New Chunxing Resource Recycling Co., MIJ International, and Mr. Babar Waheed Malik. Jiangsu New Chunxing Resource Recycling Co. possesses 45.82% shares, while MIJ International Dmcc holds 18.67% shareholding. The remaining shareholding (~ 35.5%) is equally divided between Mr. Babar Waheed Malik (CEO) and Mr. Saeed Rafiq. Mr. Babar Waheed Malik is a seasoned business professional having extensive entrepreneurial experience in both UAE and Pakistan.

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.