OREANDA-NEWS. Fitch Ratings has affirmed Thailand-based non-bank financial institution Finansa Public Company Limited's (FNS) National Long-Term Rating at 'BBB-(tha)' and revised the Outlook to Stable from Negative. It also affirmed the company's National Short-Term Rating at 'F3(tha)'.

KEY RATING DRIVERS

The ratings reflect FNS's small niche domestic franchise and its improving outlook due to its nearly completed business restructuring initiatives. Despite moderate weakening in the leverage profile and capitalisation due to its investment in the warehouse/factory rental business, the risks could be manageable due to a relatively more stable revenues flow and profitability from this business.

The revision of outlook to Stable comes as it is now clearer that the restructuring could stabilise performance, leverage and capital.

FNS's performance could be boosted in 2015 by higher revenues from normal operations and gain from asset disposals (asset management subsidiary and office space). Revenues from investment banking should improve due to the expected completion of major transactions in 2015 following delays since 2014. FNS is also expecting to book further gain from its investment in the US-based private equity fund, which has been generating returns since 2014, while additional revenues from the rental business would also help improve performance.

If completed, the 4Q15 shares swap of FNS's associate companies, Prospect Development (PD) and local listed developer MK Real Estate Development Public Company Limited, could support FNS's performance over the medium term due to MK's relatively more consistent profitability. Furthermore as the investment is listed there is the potential to enhance the liquidity profile.

Over the longer term, FNS's performance would remain sensitive to market conditions, and deal-oriented investment banking remains its core strength - although to a lower extent due to its improving revenue diversification.

Despite the expected improving performance outlook and revenue enhancement initiatives, performance is likely to be inherently volatile given the nature of FNS's business. However, its acceptable capital buffers indicated by an equity/assets ratio of 66.6% at end-March 2015 could provide some mitigation over the medium term.

RATING SENSITIVITIES

Given the scale and franchise business profile, potential rating upside is limited. Material losses, higher leverage and a loss of creditors' confidence could lead to a downgrade.

The rating actions are as follows:

National Long-Term Rating affirmed at 'BBB-(tha)'; Outlook revised to Stable from Negative
National Short-Term Rating affirmed at 'F3(tha)'