TRIS Rating Co., Ltd. has affirmed the company rating of TSFC Securities Ltd. (TSFC) at “A”. At the same time, TRIS Rating has cancelled the rating of TSFC’s up to Bt1,000 million subordinated debentures upon the request of TSFC since the company does not have a plan to issue debentures. The outlook remains “stable”. The rating reflects TSFC’s capable management team, the ability to sustain its leading market position in margin loans (credit balance financing), sound asset management, and sufficient liquidity. The rating also takes into consideration the good prospects for the stock market in the medium term, which would help support the company’s growth. Although investment in equity (through unit trusts) provides high returns, this asset class contains a degree of market risk. Therefore, performance may be more volatile.
The “stable” outlook is based on the expectation that TSFC will be able to maintain its leading position in the margin loans business. TSFC is expected to maintain an acceptable capital level while expanding its loan portfolio. Most importantly, asset quality is expected to remain good, as TSFC is expected to retain its conservative credit approval and monitoring policies.
TRIS Rating reported that TSFC is the only company in Thailand licensed to conduct securities financing, including margin loan refinancing, loans against pledged securities, and securities repurchase agreements. Driven by higher demand for margin loans in 2003, TSFC became the market leader in margin loans, with market shares of 22% in 2003, 32% in 2004, 29% in 2005, 25% in 2006, and 26% as of September 2007. Most of TSFC’s margin loans are classified as normal. The current company’s investment exposure is largely in government debt securities, and unit trusts. At the end of June 2007, TSFC had exposure in equity (through unit trusts) totaling Bt2.93 billion, or 21.3% of its total investments.
TRIS Rating said, as a result of TSFC’s capable and experienced management and continual development of its risk management framework, the company has not only sustained its leading position in the margin loan business, it has also been able to improve its financial performance. TSFC’s profits grew sharply from Bt130 million in 2000 to Bt242 million in 2004. As the stock market experienced a remarkable recovery in 2003, TSFC built up a substantial amount of margin loans, launched ESOP financing, and introduced other fee-based products, thus enabling the company to diversify its sources of revenue. TSFC has also launched other businesses, including mutual fund guarantees and securities borrowing and lending (SBL), but the ability to generate substantial revenue from these new businesses has yet to be proved. TSFC reported a lower profit of Bt165 million in 2005, but recovered to Bt295 million in 2006 and Bt254 million for the first half of 2007. Profitability, as measured by return on average equity (ROAE) and return on average assets (ROAA) grew to 13.18% and 1.42% (not annualized), respectively, as of June 2007.
TSFC’s liquidity is considered sufficient. The company has ongoing relationships with various funding sources. Although TSFC’s capital structure has been weakened by a rapid growth in assets, its current capital funds are adequate to finance normal business expansion. As of June 2007, TSFC’s shareholders’ equity grew by 15% to Bt2,062 million from Bt1,793 million at the end of 2006. The company’s equity to assets ratio increased slightly to 11.00% as of June 2007 from 10.56% in 2006. Its ratio of capital to risk assets increased to 18.6% in June 2007, said TRIS Rating. -- End
TSFC Securities Ltd. (TSFC)
Company Rating: Affirmed at A
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook is based on the expectation that TSFC will be able to maintain its leading position in the margin loans business. TSFC is expected to maintain an acceptable capital level while expanding its loan portfolio. Most importantly, asset quality is expected to remain good, as TSFC is expected to retain its conservative credit approval and monitoring policies.
TRIS Rating reported that TSFC is the only company in Thailand licensed to conduct securities financing, including margin loan refinancing, loans against pledged securities, and securities repurchase agreements. Driven by higher demand for margin loans in 2003, TSFC became the market leader in margin loans, with market shares of 22% in 2003, 32% in 2004, 29% in 2005, 25% in 2006, and 26% as of September 2007. Most of TSFC’s margin loans are classified as normal. The current company’s investment exposure is largely in government debt securities, and unit trusts. At the end of June 2007, TSFC had exposure in equity (through unit trusts) totaling Bt2.93 billion, or 21.3% of its total investments.
TRIS Rating said, as a result of TSFC’s capable and experienced management and continual development of its risk management framework, the company has not only sustained its leading position in the margin loan business, it has also been able to improve its financial performance. TSFC’s profits grew sharply from Bt130 million in 2000 to Bt242 million in 2004. As the stock market experienced a remarkable recovery in 2003, TSFC built up a substantial amount of margin loans, launched ESOP financing, and introduced other fee-based products, thus enabling the company to diversify its sources of revenue. TSFC has also launched other businesses, including mutual fund guarantees and securities borrowing and lending (SBL), but the ability to generate substantial revenue from these new businesses has yet to be proved. TSFC reported a lower profit of Bt165 million in 2005, but recovered to Bt295 million in 2006 and Bt254 million for the first half of 2007. Profitability, as measured by return on average equity (ROAE) and return on average assets (ROAA) grew to 13.18% and 1.42% (not annualized), respectively, as of June 2007.
TSFC’s liquidity is considered sufficient. The company has ongoing relationships with various funding sources. Although TSFC’s capital structure has been weakened by a rapid growth in assets, its current capital funds are adequate to finance normal business expansion. As of June 2007, TSFC’s shareholders’ equity grew by 15% to Bt2,062 million from Bt1,793 million at the end of 2006. The company’s equity to assets ratio increased slightly to 11.00% as of June 2007 from 10.56% in 2006. Its ratio of capital to risk assets increased to 18.6% in June 2007, said TRIS Rating. -- End
TSFC Securities Ltd. (TSFC)
Company Rating: Affirmed at A
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.