PSG credit rating and outlook unchanged
Global Credit Ratings (GCR) this week maintained PSK Konsult’s credit rating and outlook. PSG Konsult was dual-listed on the Namibia Stock Exchange in July 2014.
Explaining the unchanged credit rating and the outlook, GCR said in a statement that PSG Konsult had shown strong growth and diversification provided by Western Group Holdings Limited. “PSG Konsult’s market position is enhanced by its well defined strategy, within the complimentary business lines of wealth management, asset management and insurance. In addition, significant investment in Information Technology systems and back-office support capacity has positioned PSG Konsult’s business units to attract new advisers and brokers into its network and expand its client base with little additional cost,” GCR said. PSG Konsult has reported strong growth across all its fee and commission generating businesses, bolstered by rising assets under management, as well as the conversion of assets to discretionary mandates. Added to this is the greater diversification offered by the insurance premium income now generated from Western Group Holdings Limited. Although large working capital absorptions have been evidenced in all years under review, consistent with the expansion of the business, PSG Konsult has reported robust growth in cash flow from operations. Moreover, with limited capital expenditure and investment spend over most years, cash holdings have risen from N$261 million at Financial Year End 2012 to N$945 million at Financial Year End 2015, while N$160 million in debt has been repaid according to GCR.
Added GCR, “although PSG Konsult has benefited from a strong equity market performance, the weak local economy is likely to constrain the wealth management environment. Nevertheless, PSG Konsult’s small market shares in key business segments suggests substantial opportunity for growth.” Continued robust organic growth, resulting in rising recurring income and widening earnings margins could lead to positive rating action. However, a sustained downturn in the domestic economy could negatively impact fee and commission income, while severe market volatility could result in liquidity constraints.