TRIS Rating has affirmed the "BBB" rating with "stable" outlook to Ratchthani Leasing PLC's (THANI) Bt1,000 million senior secured debentures (TANI078A). The rating reflects THANI's ability to expand its portfolio, the extensive experience of the management team in the used car hire purchase business, and its long-term relationships with dealers. However, the rating is constrained by the intense competition from major leasing companies and financial institutions, which have moved aggressively into the used car hire purchase business, high oil prices, rising interest rates, and higher average funding costs following recapitalization. The rating takes into consideration the value of the hire purchase receivables for automobiles pledged as collateral, which are worth at least 135% of the outstanding debentures. Should the receivables fall below the 135% mark, THANI must make up the shortfall by holding cash equal to the value of the debentures not secured by the receivables.
The "stable" outlook reflects TRIS Rating's belief that THANI should be able to maintain its market position. The experienced management team and strong relationships with dealers will enable THANI to provide new loans despite intense competition. TRIS Rating expects that THANI will be able to control its asset quality without significantly affecting profitability.
TRIS Rating reported that THANI's loan portfolio increased 34.9% in 2004, from Bt1,517 million at the end of 2003 to Bt2,047 million at the end of 2004, while net income more than doubled from Bt33.2 million in 2003 to Bt68.8 million in 2004. However, the company's 2004 net income included an Bt18.3 million extraordinary gain from early redemption of a portion of its debentures in December 2004. Excluding this extraordinary gain, net income increased 52% from 2003 to 2004. In the first half of 2005, portfolio grew to Bt2,488 million, a 22% increase from the end of 2004. In the first half of 2005, demand for commercial cars increased due to the oil price situation, prompting THANI to concentrate more on commercial cars hire purchase loans, providing up to 50% of new loans to purchasers of commercial cars. Though commercial car loans provide higher yields to THANI, the company's decision in September 2005 to refinance its short-term funding (bills of exchange) with medium-term borrowings from commercial banks, to better match assets and liabilities, will burden its spread and profitability.
TRIS Rating said that in the past, competition in the new car hire purchase industry was considered more intense than in the used car hire purchase industry. However, current operators aggressively expanded their used car hire purchase portfolio to obtain high yields after commercial banks, with lower funding costs and more extensive networks, moved into the new automobile hire purchase industry by establishing subsidiaries. Moreover, while rising interest rates have forced funding costs higher, interest rates charged by lenders have not kept pace in order to maintain market position amidst heightened competition. Spreads are narrower for both new and used car hire purchased loans, said TRIS Rating. -- End
Ratchthani Leasing PLC's (THANI) Issue Rating: TANI078A: Bt1,000 million senior secured debentures due 2007 Affirmed at BBB Rating Outlook: Stable
The "stable" outlook reflects TRIS Rating's belief that THANI should be able to maintain its market position. The experienced management team and strong relationships with dealers will enable THANI to provide new loans despite intense competition. TRIS Rating expects that THANI will be able to control its asset quality without significantly affecting profitability.
TRIS Rating reported that THANI's loan portfolio increased 34.9% in 2004, from Bt1,517 million at the end of 2003 to Bt2,047 million at the end of 2004, while net income more than doubled from Bt33.2 million in 2003 to Bt68.8 million in 2004. However, the company's 2004 net income included an Bt18.3 million extraordinary gain from early redemption of a portion of its debentures in December 2004. Excluding this extraordinary gain, net income increased 52% from 2003 to 2004. In the first half of 2005, portfolio grew to Bt2,488 million, a 22% increase from the end of 2004. In the first half of 2005, demand for commercial cars increased due to the oil price situation, prompting THANI to concentrate more on commercial cars hire purchase loans, providing up to 50% of new loans to purchasers of commercial cars. Though commercial car loans provide higher yields to THANI, the company's decision in September 2005 to refinance its short-term funding (bills of exchange) with medium-term borrowings from commercial banks, to better match assets and liabilities, will burden its spread and profitability.
TRIS Rating said that in the past, competition in the new car hire purchase industry was considered more intense than in the used car hire purchase industry. However, current operators aggressively expanded their used car hire purchase portfolio to obtain high yields after commercial banks, with lower funding costs and more extensive networks, moved into the new automobile hire purchase industry by establishing subsidiaries. Moreover, while rising interest rates have forced funding costs higher, interest rates charged by lenders have not kept pace in order to maintain market position amidst heightened competition. Spreads are narrower for both new and used car hire purchased loans, said TRIS Rating. -- End
Ratchthani Leasing PLC's (THANI) Issue Rating: TANI078A: Bt1,000 million senior secured debentures due 2007 Affirmed at BBB Rating Outlook: Stable