Press Release

JCR-VIS Reaffirms Entity Ratings of Next Capital Limited

Karachi, March 19, 2018: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the entity ratings of Next Capital Limited (NCL) at ‘A-/A-2’ (Single A-Minus/A-Two). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on January 19, 2016.

Next Capital Limited (NCL) was incorporated in 2009 as a public limited company. NCL is principally engaged in provision of equity, fixed income brokerage as well as corporate advisory and underwriting services. Majority shareholding of the company is vested with, Mr. Najam Ali, CEO of NCL. Institutional shareholders comprise Maple Leaf Cement Limited, Muslim Commercial Bank and Abbas Corporation.

The assigned ratings incorporate improvement in capitalization indicators, sound board level governance and expected sponsor support in the form of loans from directors. However, profitability of the brokerage industry has declined during HYFY18 owing to downturn of the same.

Market volumes for the industry increased during FY17 largely due to reclassification of Pakistan Stock Exchange (PSX) from frontier market to emerging market in the MSCI Index. However, during FY18, drying out of market volumes has decreased revenue across the brokerage industry. During FY17, NCL witnessed significant growth from last year in equity brokerage income due to an increase in volume of shares traded and increase in the overall commission per share in FY17. Nevertheless, loss has been incurred in HYFY18. This was largely due to realized and unrealized loss of short term investments. Efficiency indicator has also comparatively deteriorated during HYFY18 owing to lower gross revenues during the period, as mentioned above.

NCL’s equity position improved in FY17 due to rights issue, however, loss during HY18 led to a decline in equity. Nevertheless, capitalization levels have improved since last review. During FY17, gearing levels were high but declined in the latter half of FY17 owing to rights issuance. Leverage indicators have remained within manageable levels thereafter.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Javed Callea (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi

Applicable rating criteria: Methodology - Securities Firms Rating (May 2015)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited