TRIS Rating Co., Ltd. has affirmed the company rating of Siam Panich Leasing PLC (SPL) and the ratings of its senior debentures (SPL055A, SPL036A and SPL073A) at "A-", and has also assigned SPL's proposed two tranches of debentures totaling Bt4,000 million at "A-". The ratings are based on SPL's proficient and experienced management as well as its sustained and solid relationships with automobile dealers. The ratings also take into consideration SPL's acceptable asset quality, as well as its strong market position, particularly in the used car hire purchase business. In addition, the ratings are supported by good business prospects in line with higher demand for automobiles and thus a greater need for hire purchase loans. However, these strengths are partially offset by the fierce competitive environment in the hire purchase business, which limits the company's profitability.
TRIS Rating reported that the automobile hire purchase industry is highly competitive. The entry of foreign players, captive leasing operators and finance companies into the business, beginning in 1999, has intensified the competitive environment and enlarged overall hire purchase demand. Auto sales figure that grew by more than 30% in 2002-2003 is another key market driver for hire purchase demand. To increase customer base and market share, some of the big players have employed aggressive strategies, such as cutting lending rates and lowering down payments.
SPL is ranked fifth among hire purchase operators in Thailand with 10% market share for outstanding hire purchase loans in 2002. Its total loans have grown on average by about 35% per annum during 1999-2003, and as of September 2003, it reported total outstanding loans of Bt26,831 million. SPL has been able to improve its financial performance since the crisis of 1997 and reported positive accumulated earnings since June 2002. It has been able to maintain interest spreads of around 4% to 5% during 2000 to 2001, and its spreads remained above 5% for 2002 and the first nine months of 2003. SPL reported more than Bt600 million of net profit during 1999-2001, Bt775 million for 2002 and Bt593 million for the first nine months of 2003, and this has strengthened shareholders' equity. For the period ending 30 September 2003, SPL reported satisfactory equity-to-total asset and equity-to-total loan ratios of 17.81% and 18.19% respectively.
TRIS Rating said SPL has mitigated its risk of asset-liability mismatch with long-term fixed-rate funding, issuing debentures totaling Bt14,000 million, of which Bt4,000 million have already been redeemed. Its borrowing structure has been changed to rely more on long-term borrowing. As of September 2003, short-term borrowing accounted for about 46% of its total borrowing, compared with 60% in 1997. The company plans to propose up to Bt4,000 million senior debentures in 2004, which will reduce the portion of short-term borrowings further, to around 35%.
SPL manages its loan portfolio quite efficiently. This has resulted in a low level of non-performing loans, 1.69% of average loans at the end of the third quarter of 2003, based on delinquent loans with more than three months for loans from hire purchase and leasing business and the six-month past due criterion for loans from factoring. SPL's hire purchase business, which accounted for 93% of its total lending portfolio, reported a ratio for non-accrual loans to outstanding hire purchase loans of only 0.53% at the end of September 2003. At the same time, its allowance for loan losses accounted for about 69% of its non-performing loans, TRIS Rating said. - End
Siam Panich Leasing PLC (SPL)Company Rating: Affirmed at A-Issue Ratings: SPL055A: Bt3,500 million senior debentures due 2005 Affirmed at A- SPL063A: Bt3,000 million senior debentures due 2006 Affirmed at A-SPL073A: Bt3,500 million senior debentures due 2007 Affirmed at A- Up to Bt2,000 million senior debentures due 2007 A-Up to Bt2,000 million senior debentures due 2008 A-