Bangkok--26 Jul--Fitch Ratings Fitch Ratings (Thailand) has today assigned National Long- and Short-term ratings to Asia Plus Securities Public Company Limited's (ASP) at 'A-(tha)' (A minus (tha)) and 'F2(tha)', respectively. The Outlook is Stable. The ratings reflect ASP's extensive domestic retail brokerage franchise, its strong investment banking track record and its solid capital and liquidity positions. The ratings also take into account ASP's weakening operating performance due to poor stock market conditions. While ASP benefits from an alliance with ABN AMRO, other majority-owned foreign firms tend to attract more foreign investment flows. Fitch also notes that ASP's income still depends heavily on brokerage and investment banking, both of which are subjected to volatile market conditions and volumes. The ratings also reflect credit, market and operational risks from its securities, underwriting, proprietary trading and investment businesses, although these are generally moderate. The Outlook for the rating is Stable given ASP's strong capital and liquidity positions. However, downside risks could stem from worse-than-expected economic growth, which could affect the Thai capital market. Significant diversification into riskier areas such as derivatives and proprietary trading could also raise the firm's risk profile in the longer term. In 2006, ASP's brokerage accounted for 78% of total revenue and 53% of operating profit while investment banking made up 7% and 13% respectively. Brokerage revenue dropped 17% to THB1.2 billion in 2006 as a result of a decline in market trading turnover and ASP's falling market share. Its investment banking revenue also fell 21.2% to THB108 million in 2006 due to the sluggish capital market as a result of the political and economic uncertainties. The agency expects performance in H107 to weaken further although a pickup is expected in H207 on higher trading volume. Strong competition in the brokerage industry has a significant impact on ASP's pricing, staff turnover and market share, which dropped to 5.7% in H107 from 8.1% in 2004. The liberalisation of brokerage commissions, expected in 2010, is also likely to further affect its profitability. To counter this, ASP expects to increase and diversify its revenue through the expansion of its fund management and private banking businesses in the medium term. ASP's major assets comprise of securities business receivables, investments in securities and cash. Its impaired receivables fell to THB84m (4.8% of total) at end-2006, which appear low, and are fully provisioned. ASP's major source of funding is its capital while most of its liabilities, which accounted for 22.5% of the firm's total funding, are in the form of securities trading accounts payables, which fluctuate alongside trading volumes. As at end-2006, its debt/equity (D/E) ratio stood at 29.0%, and excluding securities trading accounts, was even lower at 9.5%. ASP's net capital ratio of 282% and equity/assets ratio of 77.5% at end-2006 appear strong, in preparation for significant capital allocation to the introduction of new structured and derivative products, as well as new business opportunities in the future. The company was founded in 1974 by the Sophonpanich family. The family still holds a 15% stake while Bangkok Bank Public Company Limited (BBL) holds 8.8% with ASP's management holding another 4%. ASP has a head office and 12 branches in Bangkok, as well as 13 branches in the provinces. Contacts: Vincent Milton, Bangkok, +662 655 4762/4759; David Marshall, Hong Kong, +852 2263 9963.