The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Assigns Initial Ratings to JS Global Capital Limited Commercial Paper | PKR 1,000mln

Rating Type Debt Instrument
Action Initial Preliminary
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings take into account JS Global Capital Limited’s (“JSGCL” or “The Company”) established position as one of the top-tier brokerage houses of the industry. The ratings incorporate the stable and sizeable market share, established brand name and a sound operating platform. The strong sponsor profile, zero leveraged capital structure and well managed liquidity indicators bodes well for the rating. Following the recent boom in traded volumes of the stock exchange, core revenue of the Company surged by ~110% to ~PKR 911mln for 9MCY21 (SPLY: ~PKR 430mln) and the Company maintained its market share. The Company’s investment portfolio is compliant to its investment policy and is dominated by bank placements and equity spread transactions which provide stable stream of income. The rating takes into account the Company's strong financial profile with the Net Capital Balance of ~PKR 870mln and an equity base of ~PKR 2.3bln at end-Sep'21. Whereas, the topline of the Company depicts diversified revenue stream supplemented by consultancy income, RBFS trade, margin financing and investment return on financial assets. The Company remained profitable during 9MCY21 and generated a profit after tax of ~PKR 400mln (SPLY: ~PKR 136mln). JSGCL has issued the CP to take position in the Ready Buy Future Spread (RBFS) transaction in anticipation of a surge in market volumes on the back of reclassification from Emerging Markets to Frontier Markets by MSCI.
The ratings are 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.

About the Entity
JS Global Capital Limited ("JSGCL" or the "Company") was incorporated as a private limited company on June 28, 2000 and commenced its operations in May 2003, while obtained listing on PSX on February 7, 2005. With its head office based in Karachi, the principal business activities of the Company are Equity brokerage, Money Market, Forex, Commodity brokerage, Advisory, Underwriting, Book Runner and Consultancy services. JS Global's board comprises of eight members including the CEO. There are four non-executive directors and two executive directors. The Chairman, Mr. Shahab Anwar Khawaja, and Mr. Iftikhar Ahmed Rao are associated with the board as independent directors which enhances the overall strength of the board.

About the Instrument
JS Global Capital Limited (“JSGCL”) raised PKR 1,000mln through an Unlisted and Unsecured Commercial Paper (“CP”). The proceeds are used to fund the ongoing RBFS business segment (Ready Buy Future Sell). The CP has a tenor of 6 months and carries a profit rate of 175 basis points over 6-month KIBOR. The profit rate fixed at the time of issue (29 Nov 2021) is 12.03% (KIBOR: 10.28% + 1.75%) and the CP is set to mature on 30 May 2022.

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.