Bangkok--21 Nov--Fitch Ratings
Fitch Ratings (Thailand) has affirmed Asia Plus Securities Public Company Limited's (ASP) National Long-Term Rating at 'A-(tha)' with a Stable Outlook and its National Short-Term Rating at 'F2(tha)'.
KEY RATING DRIVERS
ASP's ratings are driven by its sound performance and well-established market position in the domestic retail brokerage business. ASP has recently been able to take advantage of favourable industry conditions, which is reflected in the improvement in its financial performance so far in 2013. The company has slightly increased its brokerage market share from 2012, and increased revenues from its other main business arms (such as trading, investment banking and asset management).
The high growth in business volumes has led to an increase in the size of ASP's balance sheet. Nevertheless, the company's capital structure remains sound with modest leverage and reasonable liquidity. As at end-September 2013, ASP had a net liquid capital ratio (NCR) of 93%, well above the regulatory limit of 7%, while its equity/assets ratio remained solid at 52%.
ASP's financial performance is linked to industry trends and brokerage volumes. Risk factors include increased competition putting pressure on brokerage commissions, and market volatility that would increase risks in its proprietary trading arm. However, Fitch believes that ASP's current capital buffers remain acceptable, and pressures that could arise from these issues appear limited in the short term.
RATING SENSITIVITIES
ASP is already one of the Fitch's more highly rated securities firms in Thailand. There could be positive action taken on its ratings if ASP is able to sustain an improvement in its financials without increasing risk appetite even during difficult times, and if it can more clearly differentiate itself in key performance ratios compared to local and regional peers.
Downward pressure on ratings may come from a significant shift in risk appetite or a strategy that leads to a change in ASP's core capital or liquidity positions or increases the risk of future deterioration. A large and sustained weakening of key financial ratios could also hurt ASP's ratings.
ASP is one of Thailand's leading securities brokerage companies. Bangkok Bank Public Company Limited (BBL; AA(tha)/Stable/F1+(tha)) is the largest single shareholder with an 8.5% stake, although the bank has limited management involvement in the company. ASP's main business activities include securities and derivatives brokerage, trading and investment, investment banking, and asset management.