TRIS Rating Co., Ltd. has assigned a “A-” rating for the proposed up to Bt700 million senior debentures of Phatra Leasing PLC (PL). At the same time, TRIS Rating has affirmed the company and current issue ratings of PL at “A-”. The rating outlook remains “stable”. 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 in 2006, PL was able to maintain its position as a market leader in automobile operating lease business, with a 24% market share (down from 29% in 2005) of total leased assets 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. The average of PL’s new lease assets continued to decrease from Bt455 million per quarter during FY2004 to Bt346 million per quarter during FY2005 and to Bt215 million in FY2006. In FY2006, two major clients, of which their existing lease assets accounted for 22% of PL’s total leased assets, decided to stop using PL’s automobile lease services. These two lessees will lease internally from their owned subsidiaries, which are newcomers in the leasing industry. This indicates that PL is exposed to inherit business risk in large customer concentration. However, in FY2007, PL’s management was able to demonstrate its ability to tap new customers to replace such two major lessees. PL’s new leased assets, therefore, almost doubled from Bt858 million in FY2006 to Bt1,553 million in FY2007. Currently, its leased assets are more diversified than in the past few years. TRIS Rating said, PL’s net profit was Bt173 million in FY2006, down from Bt182 million in FY2005. Despite a decline in rental income from operating lease contracts, its net profit recovered to Bt267 million in FY2007, as a result of an increase in gains from the disposals of leased assets and an exercise right of tax benefits. PL funded most of its asset growth by borrowing, resulting in high leverage. The company’s ratio of debt to capitalization improved in FY2005-FY2007 due to recapitalization in September 2005 and a slight decline in its leased assets in FY2006 and FY2007. With good credit risk management, PL had good asset quality. As of September 2007, the amount of overdue leases was only Bt3 million, or 0.07% 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- 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-PL114A: Bt160 million senior debentures due 2011 Affirmed at A- Up to Bt700 million senior debentures due 2011 A-Rating Outlook: Stable -------------------------------------------------------Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. 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