The VIS Credit Rating Company Limited has reaffirmed the long-term entity rating of Maple Leaf Cement Factory Limited (PSX: MLCF) at ‘A’ and the short-term rating at ‘A-1,’ maintaining a stable outlook for the company, according to a press release issued by VIS.
MLCF, a key player in Pakistan’s cement industry, is a subsidiary of Kohinoor Textile Mills Limited (KTML). The company specializes in the production and sale of cement and operates a cement factory in Iskanderabad, District Mianwali, Punjab. Its parent group, the Kohinoor Maple Leaf Group (KMLG), is involved in various sectors including textile, cement, power generation, and investment management.
VIS’s ratings take into consideration the company’s solid financial standing and operational strengths. MLCF has benefited from higher selling prices and cost control measures, particularly in managing energy expenses. This has bolstered profitability despite the cyclical nature of the construction sector, which heavily influences demand for cement.
Key Rating Factors:
- Business Risk: The cement industry in Pakistan operates in a moderately competitive environment with a stable regulatory framework. However, it is highly exposed to demand fluctuations, capital intensity, and rising energy costs. MLCF’s performance is influenced by these factors, along with external risks such as exchange rate volatility and coal price fluctuations.
- Financial Strength: MLCF has demonstrated strong liquidity, improved cash flow generation, and reduced reliance on bank financing for working capital. The company has adopted a conservative capitalization strategy, with reduced gearing and leverage ratios through profit retention and debt repayment.
- Future Outlook: While the ratings reflect MLCF’s resilience, the company will need to continue managing risks related to energy price volatility, demand recovery, and financial leverage. Maintaining strong coverage metrics will be critical for retaining the current ratings.
As MLCF moves forward, its ability to navigate external economic pressures and maintain a strong financial profile will be essential for sustaining its favorable credit ratings.
