TRIS Rating Affirms Company & Senior Unsecured Debt Ratings on “JMT” at

TRIS Rating affirms the company and issue ratings on senior unsecured debentures on JMT Network Services PLC (JMT) at ?BBB?. The rating outlook is revised to ?positive? from ?stable? following the rating action on Jaymart PLC (JMART) (rated ?BBB/Positive? by TRIS Rating). The ratings reflect JMT?s status as a core subsidiary of JMART. The ratings assigned to JMT are equivalent to those assigned to JMART according to TRIS Rating?s ?Group Rating Methodology?.

The rating action follows the rating action on JMART from the announcement on 27 August 2021 regarding the intention of VGI PLC (VGI) and U City PLC (U City) to invest in JMART and its associate company, Singer Thailand PLC (SINGER). The transactions, if approved by JMART?s shareholders in November 2021, would subsequently lead to capital injections into JMART and SINGER by end of 2021. JMT is expected to receive fresh capital of THB10 billion, of which THB5.4 billion will come from JMART and THB4.6 billion will come from existing shareholders (assuming full subscription), which will substantially strengthen the capital position of JMT.

We expect to upgrade JMT?s company and issue ratings in tandem with the upgrades on JMART?s ratings.

The company plays a vital role in the group?s financial business, which has been the backbone of the group?s diversified operations. The company has been the largest profit contributor among entities within the JMART group. In the first half of 2021 (1H2021), the company?s total revenue and net income accounted for 28% and 70% of JMART?s consolidated total revenue and net income, respectively.

In 1H2021, JMT?s revenue was THB1.6 billion, up 7% year-on-year (y-o-y). The revenue mix includes 84% from distressed debt acquisition and management business, 10% from debt collection business, and 6% from insurance business. The growth was driven mainly by its distressed debt acquisition and management business. For 1H2021, JMT?s cash collection was approximately THB2 billion, a 14% y-o-y increase. The company acquired non-performing loans (NPL) worth THB3.3 billion in 1H2021 compared with THB3.5 billion acquired in 2020. The company plans to use the fresh capital to acquire distressed loan assets worth about THB7.3 billion and debt repayment of about THB2.7 billion in 2022-2023.

The company?s distressed loan assets had outstanding claim balance of THB215.6 billion as of 1H2021 from THB207.1 billion at the end of 2020, of which THB49.5 billion were fully amortized, an increase of THB6.3 billion from the end of 2020. The company?s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin rose to 50.4% in 1H2021 from 44.7% in 1H2020.

RATING OUTLOOK

The ?positive? outlook follows that of JMART.

RATING SENSITIVITIES

The ratings and/or outlook on JMT move(s) in tandem with the ratings and/or outlook on JMART. A significant weakening of JMT?s group status to JMART could also result in a downward rating change.

RELATED CRITERIA

- Issue Rating Criteria, 15 June 2021

- Group Rating Methodology, 13 January 2021

- Rating Methodology ? Corporate, 26 July 2019

- Key Financial Ratios and Adjustments, 5 September 2018

JMT Network Services PLC (JMT)

Company Rating: BBB

Issue Rating:

Up to THB500 million senior unsecured debentures due within 2 years BBB

Outlook: Positive

TRIS Rating Co., Ltd./www.trisrating.com

Contact: santaya@trisrating.com, Tel: 0-2098-3000/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand

? Copyright 2021, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution, or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited, without the prior written permission of TRIS Rating Co., Ltd. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient?s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at

http://www.trisrating.com/en/rating_information/rating_criteria.html.

TRIS Rating Affirms Company & Senior Unsecured Debt Ratings on “JMT” at “BBB”, and Revises Outlook to “Positive” from “Stable”