Thai Rating and Information Services Co., Ltd. (TRIS) announced that it has affirmed the ratings of Phatra Leasing PLC's (PL) company and Bt400 million senior debentures at "BBB" and has assigned a "BBB" rating to PL's proposed up to Bt400 million senior debentures. The ratings are based on PL's leading position in the automobile operating lease business. PL has successfully expanded its business to new customers outside the Lamsam group, its founders and shareholders, and confirmed its strong position in the industry. However, these favorable factors are partially offset by the close substitution nature of automobile lease service by automobile hire purchase or even cash purchase as well as by inherent risk in PL's financial structure.
TRIS reported that Financial and business support from related companies in the Lamsam group, especially from the Thai Farmers Bank PLC (TFB), the major shareholder with a 16.45% stake as of January 2001, were crucial to PL during the economic crisis of 1997. At the first quarter 2001, the related companies contributed about 41% of PL's total revenues and leased about a third of its lease assets. Almost half of PL's credit facilities come from financial institutions in the group. However, PL's marketing strategy to diversify its customer base to large creditworthy corporate customers outside the Lamsam group has enhanced its revenue stream and asset quality. By improving maintenance services by using sophisticated information technology, PL has enhanced its cost efficiency and quality of service, which is crucial for its competitiveness in the automobile operating lease market. However, the entry into this market of automobile manufacturers and large dealers as well as multinational car rental companies threatens PL's competitive position in the niche market.
TRIS said that PL earned Bt63 million in profit in 2000, considerably more than its Bt48 million in profit in 1999. Its net margin, 14.74% in 2000, showed an impressive improvement from 6.57% in 1999. PL's profitability is quite sensitive to interest rate fluctuations. Interest expense, which accounted for 12.4% of total costs in 2000, decreased from around 20% in 1999, but is still a significant factor in determining PL's profit margin. A strategy to fix its cost of funds will mitigate interest rate risk. Furthermore, more prudent asset-liability management will stabilize PL's earnings and reduce financial risk substantially. In this respect, PL's financial structure still indicates mismatching. As of 30 June 2001, short term and floating rate loans accounted for 67.46% of its total debt. The proposed up to Bt400 million debentures will be three years fixed interest debentures. It will be used to repay Bt350 million debentures due in December 2001 and for general corporate purposes. After new debenture issuance, the ratio of short term and floating rate loans to total debt is expected to improve to be in the range of 33% to 37%. Its debt to equity ratio was 1.78 times at the end of first quarter 2001, still relatively low compared with its peers. PL has recently gained more access to credit facilities from financial institutions outside the Lamsam group. With these, PL has more financial flexibility for future expansion without needing to raise more equity funds.
Phatra Leasing PLC (PL) Company Rating Affirmed at BBB Issue Rating PL#2: Bt400 million senior debentures due 2003 Affirmed at BBB Up to Bt400 million senior debentures due 2004 BBB
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TRIS reported that Financial and business support from related companies in the Lamsam group, especially from the Thai Farmers Bank PLC (TFB), the major shareholder with a 16.45% stake as of January 2001, were crucial to PL during the economic crisis of 1997. At the first quarter 2001, the related companies contributed about 41% of PL's total revenues and leased about a third of its lease assets. Almost half of PL's credit facilities come from financial institutions in the group. However, PL's marketing strategy to diversify its customer base to large creditworthy corporate customers outside the Lamsam group has enhanced its revenue stream and asset quality. By improving maintenance services by using sophisticated information technology, PL has enhanced its cost efficiency and quality of service, which is crucial for its competitiveness in the automobile operating lease market. However, the entry into this market of automobile manufacturers and large dealers as well as multinational car rental companies threatens PL's competitive position in the niche market.
TRIS said that PL earned Bt63 million in profit in 2000, considerably more than its Bt48 million in profit in 1999. Its net margin, 14.74% in 2000, showed an impressive improvement from 6.57% in 1999. PL's profitability is quite sensitive to interest rate fluctuations. Interest expense, which accounted for 12.4% of total costs in 2000, decreased from around 20% in 1999, but is still a significant factor in determining PL's profit margin. A strategy to fix its cost of funds will mitigate interest rate risk. Furthermore, more prudent asset-liability management will stabilize PL's earnings and reduce financial risk substantially. In this respect, PL's financial structure still indicates mismatching. As of 30 June 2001, short term and floating rate loans accounted for 67.46% of its total debt. The proposed up to Bt400 million debentures will be three years fixed interest debentures. It will be used to repay Bt350 million debentures due in December 2001 and for general corporate purposes. After new debenture issuance, the ratio of short term and floating rate loans to total debt is expected to improve to be in the range of 33% to 37%. Its debt to equity ratio was 1.78 times at the end of first quarter 2001, still relatively low compared with its peers. PL has recently gained more access to credit facilities from financial institutions outside the Lamsam group. With these, PL has more financial flexibility for future expansion without needing to raise more equity funds.
Phatra Leasing PLC (PL) Company Rating Affirmed at BBB Issue Rating PL#2: Bt400 million senior debentures due 2003 Affirmed at BBB Up to Bt400 million senior debentures due 2004 BBB
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