Bangkok--26 Jun--TRIS Rating TRIS Rating Co., Ltd. has downgraded the company rating of EASY BUY PLC to “BBB” from “BBB+” but has affirmed EASY BUY’s guaranteed debentures at “AA” as they are fully guaranteed by its parent company, ACOM Co., Ltd., a company rated “A2” with a “stable” outlook by Moody’s Investor Service (Moody’s) and “BBB+” with a “negative” outlook by Standard & Poor’s (S&P). ACOM’s rating is supported by its strong market position as one of the top four consumer finance companies in Japan, in terms of loan receivables and asset size. It has a strong operating branch network in the consumer finance business, a strong capital base, and a sound and experienced management team. These strengths are constrained by a fiercely competitive environment and regulatory risk, which might negatively affect the performance of non-bank consumer finance companies. The guaranteed debenture rating is based on the credit quality of the guarantor, and the unconditional and irrevocable guarantee of the debentures. The rating of EASY BUY is based on the company’s acceptable credit risk and information management systems, the strong support received from its parent company and strategic partners, solid market position in the non-bank consumer finance business, and capable management team. The rating also takes into consideration the industry’s low penetration rate and strong market demand in the retail finance business. However, the rating is constrained by the company’s low capitalization compared to its peers, an intensely competitive environment, less favourable business factors, and regulatory risk, which affect the company’s business expansion and profitability. The “stable” outlook for EASY BUY’s guaranteed debentures reflects TRIS Rating’s expectation that ACOM will be able to sustain its solid position in the non-bank consumer finance market despite the unfavorable regulatory controls and limited markets in the Japanese consumer finance industry. The outlook also reflects ACOM’s ability to improve its financial performance after implementing its new business model. The new model brings more diverse sources of income and efficient operating cost management to compensate for the expected narrower interest margin due to the interest rate cap. EASY BUY’s “stable” outlook reflects TRIS Rating’s expectation that the company can deliver financial performance as expected and can sustain its position in the non-bank consumer finance business due to its sufficient track record, good brand recognition, and strong support from its major shareholders. The company’s good operational and acceptable risk management systems are expected to help mitigate future downside risk from adverse changes in the business environment. TRIS Rating reported that as of December 2006, EASY BUY’s loan receivables contributed 3.1% to ACOM’s consolidated receivables, up from 0.9% at the end of FY2004 (ending March 2004). The amount of EASY BUY’s liabilities guaranteed by ACOM totalled 48,556 million yen as of December 2006, representing 7.9% of ACOM’s total shareholders’ equity. EASY BUY is ACOM’s first overseas subsidiary in Southeast Asia, and figures significantly in ACOM’s strategy to be a major regional player in the consumer finance industry. ACOM has shown a strong commitment to EASY BUY, providing financial and business support by passing technology, giving know-how for business practices and developing new products for the Thai market. TRIS Rating said, eleven years of experience in the non-bank consumer finance industry has provided EASY BUY with a sufficient track record and good brand recognition. However, strong financial and business support from parent company, ACOM, is crucial for EASY BUY’s future market position and sustainable growth. Though the nature of its business, providing small loans per customer to a large number of customers, helps diversify risk, the company is still subject to regulatory risk. Asset quality is a crucial factor of EASY BUY’s credit profile as the company has been pressured by its low capitalization and changing business factors. EASY BUY has adopted many of ACOM’s business operation and risk management tools, including a modern credit-scoring model and effective vendor and information management systems, plus ACOM’s loan collection methods and standards to ensure asset quality control. However, EASY BUY still has high provisioning costs during the past two years due to high NPLs in the motorcycle business and NPLs during the period of controversy on interest rate charged to its retail clientsonce the new interest rate cap has been implemented. As a result, EASY BUY reported a loss of Bt113 million in 2006. This loss cut EASY BUY’s capital base, dropping the ratio of total shareholders’ equity to total assets from 9.42% in 2005 to 7.16% in 2006, said TRIS Rating.