TRIS Rating Co., Ltd. has assigned a “A-” rating to the proposed issue of up to Bt600 million in senior debentures of Phatra Leasing PLC (PL). At the same time, TRIS Rating has also affirmed the company rating and the current issue ratings of PL at “A-”. The rating outlook remains “stable”. PL will use the proceeds from the proposed debentures to replace its Bt400 million matured debentures and for business expansion. The ratings reflect the demonstrated ability of PL’s management to maintain a strong market position in the automobile operating lease business despite increasingly intense competition and an unfavorable operating environment. The ratings also reflect PL’s good credit and residual risk management system and conservative underwriting process, which have enabled the company to maintain good asset quality during its portfolio expansion. The ratings also take into consideration increasing corporate demand for outsourced automobile maintenance services. The uncertain operating environment will continue to be major constraint on PL’s profitability and business expansion.
The “stable” outlook reflects PL’s ability to maintain its leading position in the automobile operating lease business and deliver medium-term performance as expected. The company is likely to retain its existing major customers, as well as expand its customer base while maintaining its good asset quality. However, its profitability is still pressured by intense competition and unexpected losses from changes in the operating environment.
TRIS Rating reported that PL was able to maintain its position as a market leader in automobile operating lease business, with a 24% market share of total leased assets in 2006 held by 25 large operators in TRIS Rating’s database. PL’s leased asset growth and profitability in FY2006 (October 2005-September 2006) were weaker due to intense competition, rising oil prices and uncertain political condition. In addition, two major clients, of which their existing leased assets accounted for 22% of PL’s total leased assets, decided to stop using PL’s automobile lease services. However, in FY2007, PL’s management was able to demonstrate its ability to tap new customers to replace the two major lessees. PL’s new leased assets, therefore, almost doubled from Bt858 million in FY2006 to Bt1,553 million in FY2007. For the first nine months of FY2008 (ending June 2008), PL’s new leased assets were Bt1,631 million, which enlarged outstanding leased assets to Bt4,499 million from Bt4,025 million at the end of FY2007. Currently, its leased assets are more diversified than in the past few years.
TRIS Rating said, PL’s net profit recovered to Bt267 million in FY2007 from Bt173 million in FY2006, as a result of an increase in gains from the disposals of leased assets and an exercise right of tax benefits. For the first nine months of FY2008, net profits were Bt165 million, which was still in line with TRIS Rating’s expectation. PL funded most of its asset growth by borrowing, resulting in high leverage. The company’s ratio of debt to capitalization increased from 63.93% at the end of FY2007 to 67.08% at the end of June 2008. With good credit risk management, PL had good asset quality. As of June 2008, the amount of overdue leases was only Bt3.58 million, or 0.08% of its total portfolio. A strong servicing network nationwide and a large capital base compared with its peers enhanced PL’s ability to service large customers. This caused PL to have high exposure on concentration risk, but the risk was offset by low default risk as large customers are for the most part financially reliable. -- End
Phatra Leasing PLC (PL)
Company Rating: Affirmed at A-
Issue Ratings:
PL08OA: Bt400 million senior debentures due 2008 Affirmed at A-
PL094A: Bt500 million senior debentures due 2009 Affirmed at A- PL104A: Bt400 million senior debentures due 2010 Affirmed at A-
PL109A: Bt400 million senior debentures due 2010 Affirmed at A-
PL113A: Bt700 million senior debentures due 2011 Affirmed at A-
PL114A: Bt160 million senior debentures due 2011 Affirmed at A-
Up to Bt600 million senior debentures due 2011 A-
Rating Outlook: Stable
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Copyright 2008, 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 reflects PL’s ability to maintain its leading position in the automobile operating lease business and deliver medium-term performance as expected. The company is likely to retain its existing major customers, as well as expand its customer base while maintaining its good asset quality. However, its profitability is still pressured by intense competition and unexpected losses from changes in the operating environment.
TRIS Rating reported that PL was able to maintain its position as a market leader in automobile operating lease business, with a 24% market share of total leased assets in 2006 held by 25 large operators in TRIS Rating’s database. PL’s leased asset growth and profitability in FY2006 (October 2005-September 2006) were weaker due to intense competition, rising oil prices and uncertain political condition. In addition, two major clients, of which their existing leased assets accounted for 22% of PL’s total leased assets, decided to stop using PL’s automobile lease services. However, in FY2007, PL’s management was able to demonstrate its ability to tap new customers to replace the two major lessees. PL’s new leased assets, therefore, almost doubled from Bt858 million in FY2006 to Bt1,553 million in FY2007. For the first nine months of FY2008 (ending June 2008), PL’s new leased assets were Bt1,631 million, which enlarged outstanding leased assets to Bt4,499 million from Bt4,025 million at the end of FY2007. Currently, its leased assets are more diversified than in the past few years.
TRIS Rating said, PL’s net profit recovered to Bt267 million in FY2007 from Bt173 million in FY2006, as a result of an increase in gains from the disposals of leased assets and an exercise right of tax benefits. For the first nine months of FY2008, net profits were Bt165 million, which was still in line with TRIS Rating’s expectation. PL funded most of its asset growth by borrowing, resulting in high leverage. The company’s ratio of debt to capitalization increased from 63.93% at the end of FY2007 to 67.08% at the end of June 2008. With good credit risk management, PL had good asset quality. As of June 2008, the amount of overdue leases was only Bt3.58 million, or 0.08% of its total portfolio. A strong servicing network nationwide and a large capital base compared with its peers enhanced PL’s ability to service large customers. This caused PL to have high exposure on concentration risk, but the risk was offset by low default risk as large customers are for the most part financially reliable. -- End
Phatra Leasing PLC (PL)
Company Rating: Affirmed at A-
Issue Ratings:
PL08OA: Bt400 million senior debentures due 2008 Affirmed at A-
PL094A: Bt500 million senior debentures due 2009 Affirmed at A- PL104A: Bt400 million senior debentures due 2010 Affirmed at A-
PL109A: Bt400 million senior debentures due 2010 Affirmed at A-
PL113A: Bt700 million senior debentures due 2011 Affirmed at A-
PL114A: Bt160 million senior debentures due 2011 Affirmed at A-
Up to Bt600 million senior debentures due 2011 A-
Rating Outlook: Stable
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Copyright 2008, 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.