Asia Capital Group gets cautious ‘BB’ rating
TRIS Rating has given Asia Capital Group (ACAP) a “BB” rating, which it says reflects the group’s short-track record in a newly chosen core business, weak balance sheet due to unproven quality and growth in the loan portfolio, as well as high leverage.
Asia Capital is also exposed to concentration risk because it provides loans to a small number of borrowers.
However, TRIS said, the rating is supported by the company’s good prospects, since small- and medium-sized enterprises have high demand for short-term loans. The company needs time to prove it can grow steadily and maintain a satisfactory financial performance, it said.
The “stable” outlook is based on the expectation that ACAP will maintain its market position, deliver stable and satisfactory financial performance, and maintain a strong financial position.
TRIS Rating expects that ACAP’s loan quality will not decline markedly to the point it would substantially affect the company’s financial profile.
TRIS said the outlook is limited in the medium term due to the company’s short track record. It needs time to stabilise its business profile and financial profile, the factors that feature high profitability and a strong capital base.
The rating could be revised downward if ACAP’s asset quality deteriorates significantly, which would affect profitability and the capital base, TRIS said.
