TRIS Rating Co., Ltd. has affirmed the rating of TSFC Securities Ltd. (TSFC) at "A-" and has also assigned a "BBB+" rating to its proposed up to Bt1,000 million subordinated debentures. The ratings reflect TSFC's capable board of directors and management team, sufficient liquidity, and sound asset management. The ratings also take into account the good medium-term prospects for the stock market, which leads to more business opportunities. However, the liquidity and share prices in Thai stock market remain highly volatile. Although TSFC started to get substantial securities finance business during the fourth quarter of 2003, it needs more time to prove that it can sustain its strong market position in this core business.
TRIS Rating reported that TSFC was established in 1996 as a part of Thailand capital market development plan. TSFC is the only company licensed to conduct the securities finance business, aiming to serve as reliable source of funds for securities firms and as an arm through which authorities implement policies to support securities businesses. TSFC's business activity initially was to provide funds to securities firms to enhance their liquidity when needed. The company later expanded its securities-related credits to investors, including margin loans. Since 1998, its role as a funds provider to securities firms has been immaterial amid the long slump in the stock market which resulted in slack business activities of securities firms. In response to this difficult environment, TSFC managed its excess funds by investing in unit trusts of mutual funds. Consequently, since 1998 its asset structure has been mainly composed of investment in securities. Its main source of revenue thus has stemmed from dividends on securities rather than its core financing business. Seeking more business opportunities, the company was allowed to conduct several securities-related business activities, including margin loans, loans to directors and employees to purchase securities under employee stock ownership plans (ESOP), loans to investors for private placements (PPs), initial public offerings (IPOs), and public offerings (POs). In addition, TSFC can conduct stock borrowing and lending (SBL), and provide guarantees to securities underwriters and mutual fund investors.
TRIS Rating said TSFC was on track to conduct its core business in 2003, aided by a remarkable recovery of the stock market and its management who built up relations with securities firms. As a result, TSFC's margin loans climbed far above its forecasts, from Bt170 million as of 2002 to Bt3,405 million as of 2003. TSFC's market share of margin loans increased from 8% as of 2002 to 22% as of 2003. TSFC continued to expand its margin loans to Bt4,745 million as of April 2004, giving TSFC the dominant market share of margin loans at 34%. TSFC's assets rose dramatically from Bt6,330 million as of 2002 to Bt11,117 million as of 2003, a substantial increase of 76%. The company financed its tremendous growth by borrowing from several sources of funds, pushing its borrowings to total Bt8,018 million as of 2003, up 64% from Bt4,899 million as of 2002. Although its equity to assets ratio was weakened from 22% as of 2002 to 17.4% as of 2003, the ratio was at an acceptable level. Moreover, its efforts to operate additional securities-related businesses were paying off as it debuted new businesses in 2003, including mutual fund guarantee and ESOP financing. Still in their infancy, the new businesses have not yet generated substantial income for the company.
Generally, TSFC provides collateral-based financing, employing a good credit monitoring system to ensure sufficient collateral to cover exposures. As of 2003, its margin loan to collateral value was low at 34%. TSFC's largest asset class as of 2003 was investment in securities, accounting for 56% of total assets. Net loans contributed around 33% of total assets, up from 4% in 2002. The proportion of net loans to total assets will tend to increase in the years to come. TSFC's main source of revenue was still dividends on securities, which accounted for around 92% of total revenue in 2003. However, interest on loans is expected to become another major source of revenue in the future. Successfully managing its investment portfolio, TSFC posted its sixth straight yearly profit in 2003. Although TSFC's capital has been lessened by a massive loan expansion, it is sufficient for further normal business expansion. Moreover, TSFC is considering securing new long-term funding through a new issue up to Bt1,000 million subordinated debentures. The new funds will enhance its tier two capital as well as fund new business opportunities. TSFC strives to diversify its revenue sources to mitigate risks arising from adverse changes in the stock market. TRIS Rating sees that TSFC's new businesses, some of which generate fee-based income, have yet to prove their ability to generate sustainable profit.--End
TSFC Securities Ltd. (TSFC)Company Rating: Affirmed at A-Issue Rating:Up to Bt1,000 million subordinated debentures due 2009 BBB+
TRIS Rating reported that TSFC was established in 1996 as a part of Thailand capital market development plan. TSFC is the only company licensed to conduct the securities finance business, aiming to serve as reliable source of funds for securities firms and as an arm through which authorities implement policies to support securities businesses. TSFC's business activity initially was to provide funds to securities firms to enhance their liquidity when needed. The company later expanded its securities-related credits to investors, including margin loans. Since 1998, its role as a funds provider to securities firms has been immaterial amid the long slump in the stock market which resulted in slack business activities of securities firms. In response to this difficult environment, TSFC managed its excess funds by investing in unit trusts of mutual funds. Consequently, since 1998 its asset structure has been mainly composed of investment in securities. Its main source of revenue thus has stemmed from dividends on securities rather than its core financing business. Seeking more business opportunities, the company was allowed to conduct several securities-related business activities, including margin loans, loans to directors and employees to purchase securities under employee stock ownership plans (ESOP), loans to investors for private placements (PPs), initial public offerings (IPOs), and public offerings (POs). In addition, TSFC can conduct stock borrowing and lending (SBL), and provide guarantees to securities underwriters and mutual fund investors.
TRIS Rating said TSFC was on track to conduct its core business in 2003, aided by a remarkable recovery of the stock market and its management who built up relations with securities firms. As a result, TSFC's margin loans climbed far above its forecasts, from Bt170 million as of 2002 to Bt3,405 million as of 2003. TSFC's market share of margin loans increased from 8% as of 2002 to 22% as of 2003. TSFC continued to expand its margin loans to Bt4,745 million as of April 2004, giving TSFC the dominant market share of margin loans at 34%. TSFC's assets rose dramatically from Bt6,330 million as of 2002 to Bt11,117 million as of 2003, a substantial increase of 76%. The company financed its tremendous growth by borrowing from several sources of funds, pushing its borrowings to total Bt8,018 million as of 2003, up 64% from Bt4,899 million as of 2002. Although its equity to assets ratio was weakened from 22% as of 2002 to 17.4% as of 2003, the ratio was at an acceptable level. Moreover, its efforts to operate additional securities-related businesses were paying off as it debuted new businesses in 2003, including mutual fund guarantee and ESOP financing. Still in their infancy, the new businesses have not yet generated substantial income for the company.
Generally, TSFC provides collateral-based financing, employing a good credit monitoring system to ensure sufficient collateral to cover exposures. As of 2003, its margin loan to collateral value was low at 34%. TSFC's largest asset class as of 2003 was investment in securities, accounting for 56% of total assets. Net loans contributed around 33% of total assets, up from 4% in 2002. The proportion of net loans to total assets will tend to increase in the years to come. TSFC's main source of revenue was still dividends on securities, which accounted for around 92% of total revenue in 2003. However, interest on loans is expected to become another major source of revenue in the future. Successfully managing its investment portfolio, TSFC posted its sixth straight yearly profit in 2003. Although TSFC's capital has been lessened by a massive loan expansion, it is sufficient for further normal business expansion. Moreover, TSFC is considering securing new long-term funding through a new issue up to Bt1,000 million subordinated debentures. The new funds will enhance its tier two capital as well as fund new business opportunities. TSFC strives to diversify its revenue sources to mitigate risks arising from adverse changes in the stock market. TRIS Rating sees that TSFC's new businesses, some of which generate fee-based income, have yet to prove their ability to generate sustainable profit.--End
TSFC Securities Ltd. (TSFC)Company Rating: Affirmed at A-Issue Rating:Up to Bt1,000 million subordinated debentures due 2009 BBB+