Press Release

VIS Reaffirms Broker Management Rating of Fortune Securities Limited

Karachi, February 27, 2024: VIS Credit Rating Company Ltd. (VIS) has reaffirmed Broker Management Rating of ‘BMR2’ assigned to Fortune Securities Limited. Outlook on the assigned rating is ‘Stable’. Last rating action was announced on November 22, 2022.

The rating signifies strong external control framework, sound HR and infrastructure, internal control framework and compliance risk management while regulatory requirement and supervision, Client relationship and fair play and financial management are considered adequate.

Fortune Securities Limited (FSL) is a public unlisted company incorporated in 1994. The company is principally engaged in brokerage of shares, securities, commodities, research and other financial instruments. Major shareholding of the company is vested with Mr. Anis Ur Rahman who serves as the Chief Executive Officer of the company. FSL runs its operations through two of its registered offices located in Karachi. Fortune Securities Limited has a TREC (Trading Right Entitlement Certificate) for Trading and Clearing Services granted by Pakistan Stock Exchange Limited (PSX). External auditors of the company are M/s Naveed Zafar Ashfaq Jaffery & Co. – Chartered Accountants. Auditors belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP).

Assigned rating takes into account the Company’s governance framework wherein limited board size remains a constraint. Increasing the board size along with independent representation as well as having more certified directors may enhance the governance framework. Similarly, the same will help in avoiding the same members across the board committees. External controls of the Company is considered strong. Internal policies of the Company are in place, however, enhancing the scope of these policies may be considered. Sharing the conflict of interest policy with both staff and customers may strengthen the internal controls of the Company. Similarly, more frequent reporting of personal trade details to the compliance may further enhance the same.

Rating also takes into account the client relationship of the Company, with modern facilitation tools including mobile and web-based trading terminals in place. Nonetheless, client grievance procedures may be improved for greater visibility. Likewise, deployment of prompt alerts upon trade execution may improve the client services of the Company. The HR & infrastructure of the Company is considered sound, however, contingency measures of the Company may be improved by securing offsite at third party warehouse. Assigned rating also takes note of Company’s sound compliance and risk management.

Meanwhile the financial profile of the Company depicts improvement with a recovery in its earning profile in 6MFY24 on account of increased market activity. Moreover, the Company’s cost to income ratio also witnessed a notable improvement, albeit remaining on the higher side. Capitalization indicators of the Company are considered adequate. However, liquidity profile of the Company is a constraint on assigned rating given its low coverage against total liabilities. In addition, market risk has also reported a sharp spike as Company has increased its quantum of proprietary operations.

Going forward, ratings will remain sensitive to the Company's ability to improve its liquidity and market risk metrics. Moreover, its ability to sustain improvements in earnings and efficiency profiles will also be important considerations for future review.

For further information on this ratings announcement, please contact Shaheryar Khan at 021-35311861-64 (Ext. 202) and/or the undersigned at 021-35311861-64 (Ext. 201) or email at info@vis.com.pk.


Javed Callea
Advisor

Applicable Rating Criteria: Broker Management Ratings:
https://docs.vis.com.pk/docs/BMR202007.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .