TRIS Rating affirms the company rating on Pi Securities PLC (Pi), formerly known as Country Group Securities PLC (CGS), at ?BBB-? with a ?stable? rating outlook. The rating mainly reflects the company?s status as a core subsidiary of Country Group Holdings PLC (CGH). The rating on Pi is equivalent to the company rating on CGH (rated ?BBB-/Stable? by TRIS Rating) according to TRIS Rating?s ?Group Rating Methodology?.
KEY RATING CONSIDERATIONS
A core subsidiary of CGH
TRIS Rating views Pi as a core subsidiary of CGH as it is the sole operating subsidiary wholly owned by CGH. Pi contributed 98.2% of CGH?s revenue in the first half of 2022 (1H22) and 68.6% in 2021. Pi is also connected to CGH from a management perspective as its business directions and operations are influenced by representatives of CGH who sit on Pi?s board of directors. CGH also oversees the group funding and investment strategy.
We believe Pi will remain a core subsidiary of CGH in the foreseeable future, supported by the continuous expansion of its existing business to generate significant earnings for the group. In addition, the management?s plan to undertake new initiatives such as Pi Financial and Pi digital assets brokerage business, if successful, would also enhance Pi?s importance to the group.
Steadily improving performance
Pi?s market position in the securities and derivatives brokerage business has improved continuously in recent years. The company?s revenue market share in the securities brokerage business grew to 2.7% in 2021 and in 1H22 from 0.9% in 2017. Its revenue share in derivatives brokerage ranked first in the industry in 2021 with a share of 14.5% and in 1H22 with a share of 15.0% from 0.4% in 2017. Brokerage revenue declined 6% year-on-year (y-o-y) in 1H22, following a 17% y-o-y contraction in market turnover in the same period. Overall, Pi has demonstrated improved competitiveness in the brokerage business which is helping strengthen its financial performance and meeting expectations and strategic objectives of the group.
Constant financial support
The company?s core group status is strengthened by the financial support it receives from the group. CGH provided funding for the company in the form of subordinated debentures totaling THB300 million at the end of June 2022. The company also had credit facilities from financial institutions to support its operations. At the end of June 2022, the company had access to credit facilities totaling THB1.6 billion, around 75% of which were undrawn.
BASE-CASE ASSUMPTIONS
TRIS Rating?s base-case assumption is that Pi will remain a core subsidiary of CGH.
RATING OUTLOOK
The ?stable? outlook reflects our view that Pi will maintain its status as the core subsidiary of CGH and will continue to contribute significant revenues and profit to the group.
RATING SENSITIVITIES
The rating and/or outlook on Pi could be revised upward or downward should there be any changes in CGH?s credit profile or if there are any changes in our view on Pi?s group status to CGH.
COMPANY OVERVIEW
Pi (previously known as CGS) has been granted licenses to offer a full range of services in the securities industry. The company was originally registered under the name ?Adkinson Enterprise Co., Ltd.? in 1966. The company changed its name to ?Adkinson Securities Co., Ltd.? in 1979, was converted to a public company in 1994, and became ?Country Group Securities PLC? (CGS) in 2009.
In 2006, the company?s shareholding structure changed significantly. The controlling shareholders changed from the Kewkacha family to the Taechaubol family. The Kewkacha family continues to hold some shares but has left management of the company to the Taechaubol family. As of May 2014, the Taechaubol family held 18.3% of the company?s outstanding shares.
In 2014, CGH was established as a holding company, making a tender offer for all shares of CGS effective on 8 January 2014.
In 2016, CGS sold some of its retail brokerage business to UOB Kay Hian Securities (Thailand) PLC. The company then received a permit from the Securities and Exchange Commission (SEC) to commence its private fund management business in June 2017.
In 2022, CGS changed its name to ?Pi Securities PLC?.
RELATED CRITERIA
- Group Rating Methodology, 7 September 2022
Pi Securities PLC (PI)
Company Rating: BBB-
Rating Outlook: Stable TRIS Rating Co., Ltd./www.trisrating.com Contact: santaya@trisrating.com, Tel: +66 0 2 098 3000/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand ? Copyright 2022, 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 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 www.trisrating.com/rating-information/rating-criteria