Fitch Upgrades Asia Plus Group Holdings to #A(tha)#; Outlook Stable

Stocks and Financial Services Press Releases Friday July 13, 2018 10:36
Bangkok--13 Jul--Fitch Ratings

Fitch has today upgraded the National Long-Term Rating on Asia Plus Group Holdings Public Company Limited (ASP) to 'A(tha)' from 'A-(tha)'. The Outlook is Stable. At the same time, the agency has upgraded ASP's National Short-Term Rating to 'F1(tha)' from 'F2(tha)'.

KEY RATING DRIVERS

The upgrade to 'A(tha)' reflects ASP's improved domestic franchise and business model over the last several years. Fitch believes the improvement will be sustained, driven by the group's two-pronged strategy of developing its wealth-management franchise and full-service brokerage platform. Fitch expects ASP to further diversify its businesses, enabling the group to strengthen its competitive position and reduce earnings volatility. The rating upgrade also underscores ASP's consistently diversified funding structure and its high levels of liquid assets compared to other standalone securities firms in Thailand.

Fitch assesses the group on a consolidated basis, highlighting the scale of its operating subsidiaries and the level of integration and linkages between the subsidiaries. Asia Plus Securities Company Limited (ASPS) is the main operating subsidiary, but ASPS's clients also use services from the group's other subsidiaries that provide fund management and financial advisory.

RATING SENSITIVITIES

Fitch may consider downgrading the National Ratings of ASP if the firm's profitability declines sharply over a long period or if the firm aggressively expands its risky assets beyond that of industry peers. The agency does not believe this to be likely over the near term.

Conversely, the agency expects further upside from the current rating level to be limited, given numerous challenges facing Thai securities firms, such as those concerning profitability. These challenges pose medium-term earnings risks to the securities industry as a whole, although ASP is better placed than its Fitch-rated peers to weather these headwinds.


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