PACRA Maintains Entity Rating of Bestway Cement Limited

Islamabad, May 07, 2018 (PPI-OT): Bestway Cement’s ratings reflect its market leading position in industry emanating from strong market share (~18%). The company has history of successful mergers, further fortified by cost-efficient operational framework, robust EBITDA margins and strong profitability. The Company has announced capacity expansion (1.8mln tpa) – entirely financed through internal cashflows – which is likely to commence operations in 1QFY19. This will assist the Company in holding its market share amidst the industry wide significant expansion trend.

In addition to strong local demand, the company’s business profile is further strengthened by an established dividend stream from its strategic investment – United Bank Limited (~8% stake) – augmenting its cashflows. The entity’s financial risk, mainly reflected from sturdy coverages and low leveraged capital structure, remains fairly low. The ratings derive benefit/comfort from (i) the company’s association with Bestway Group (UK) and (ii) strong local cement demand on the back of rising economic and infrastructure activity which is likely to prevail in upcoming years.

The ratings are dependent on upholding of the company’s business vis-à-vis financial risk profile. Any significant deterioration in the sector’s outlook particularly any unfavourable change in demand and expansion matrix, thereby exerting pressure on prices and margins, may negatively impact the ratings.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425