TRIS Rating Co., Ltd. has affirmed the ratings of Thai Commercial Auto Co., Ltd. (TCA) and its Bt500 million senior debentures at "BBB+". The ratings reflect the strong support, both business and financial, that TCA receives from its three shareholders, as well as its good financial position and asset quality. As TCA serves as a financial arm for supporting car sales under the Yontrakit Group's distribution, therefore, the ratings take into consideration the group's experience as a key automobile distributor for European- and Korean-brand cars in the Thai market, and also the growth prospects for automobile sales in Thailand. However, these strengths are partially offset by intense competition in both the automobile distribution industry and the automobile hire purchase industry in Thailand, which impacts TCA's competitive position and portfolio growth. The "stable" outlooks for the ratings of TCA reflect TRIS Rating's expectation that TCA will deliver performance as expected, despite a severe competitive environment, changes in business strategy and an upward trend of interest rates. Business and financial support from its major shareholders should help TCA maintain its business and financial position in line with expectations.
TRIS Rating reported that TCA has utilized its shareholders' support to strengthen its business and financial performance. TISCO Finance PLC, as the largest shareholder, has played an important role in the set-up of a business operation system and provided a risk management system for TCA, while Leenutaphong Holding Co., Ltd., a holding company of the Yontrakit Group, provides business through its dealer network and ITOCHU Corporation, a large Japanese trading firm, is involved in fund raising operation.
TRIS Rating said, TCA's capital base is considered quite strong, with an equity-assets ratio of 30% during 2002-2003, which was higher than the average of 12% for the 29 largest hire purchase operators in Thailand. For year-end 2003, TCA's return on average assets was 3.03% and its return on average equity was 9.96%, compared with 2002 levels of 3.30% and 8.71%, respectively. TCA has utilized its substantial capital base as a source of long-term funding and has closely monitored asset-liability gap to keep it in line with the company's asset-liability management policy. In 2003, the company issued Bt500 million debentures to match its asset structure. TCA's asset quality is considerably good, as it applies the same standard for credit approval as TISCO, and uses the same asset quality control system. As of December 2003, TCA's non-performing loans accounted for 0.44% of its average hire purchase receivables, which was below an average of 1% for its peers rated by TRIS Rating.
Starting in 2004, TISCO is consolidating its business strategy and centralizing its group's operation. TCA will provide automobile hire purchase services for only the Yontrakit Group, while TISCO will serve for non-Yontrakit Group's sales. Therefore, the Yontrakit Group's business performance will directly influence TCA's business direction. TRIS Rating expects that the Yontrakit Group's substantial expertise and experience in car sales and good prospects for Thai automobile market will support TCA's business volume in the future. -- End
Thai Commercial Auto Co., Ltd. (TCA) Company Rating: Affirmed at BBB+ Issue Rating: Bt500 million senior debentures due 2006 Affirmed at BBB+ Rating Outlook: Stable
TRIS Rating reported that TCA has utilized its shareholders' support to strengthen its business and financial performance. TISCO Finance PLC, as the largest shareholder, has played an important role in the set-up of a business operation system and provided a risk management system for TCA, while Leenutaphong Holding Co., Ltd., a holding company of the Yontrakit Group, provides business through its dealer network and ITOCHU Corporation, a large Japanese trading firm, is involved in fund raising operation.
TRIS Rating said, TCA's capital base is considered quite strong, with an equity-assets ratio of 30% during 2002-2003, which was higher than the average of 12% for the 29 largest hire purchase operators in Thailand. For year-end 2003, TCA's return on average assets was 3.03% and its return on average equity was 9.96%, compared with 2002 levels of 3.30% and 8.71%, respectively. TCA has utilized its substantial capital base as a source of long-term funding and has closely monitored asset-liability gap to keep it in line with the company's asset-liability management policy. In 2003, the company issued Bt500 million debentures to match its asset structure. TCA's asset quality is considerably good, as it applies the same standard for credit approval as TISCO, and uses the same asset quality control system. As of December 2003, TCA's non-performing loans accounted for 0.44% of its average hire purchase receivables, which was below an average of 1% for its peers rated by TRIS Rating.
Starting in 2004, TISCO is consolidating its business strategy and centralizing its group's operation. TCA will provide automobile hire purchase services for only the Yontrakit Group, while TISCO will serve for non-Yontrakit Group's sales. Therefore, the Yontrakit Group's business performance will directly influence TCA's business direction. TRIS Rating expects that the Yontrakit Group's substantial expertise and experience in car sales and good prospects for Thai automobile market will support TCA's business volume in the future. -- End
Thai Commercial Auto Co., Ltd. (TCA) Company Rating: Affirmed at BBB+ Issue Rating: Bt500 million senior debentures due 2006 Affirmed at BBB+ Rating Outlook: Stable