March 22, 2017 / 2:42 AM / 9 months ago

Fitch Publishes Far East Horizon's 'BBB-' Rating

(The following statement was released by the rating agency) HONG KONG/TAIPEI, March 21 (Fitch) Fitch Ratings has published China-based Far East Horizon Limited's Long-Term Issuer Default Rating (IDR) of 'BBB-' and Short-Term IDR of 'F3'. The Outlook is Stable. Far East Horizon is the fifth-largest leasing company overall and among the largest independent leasing companies in China by assets. It has a market share of about 3% of the leasing market in China. Far East Horizon's major shareholders include SinoChem Group (23.3%), China Minsheng Investment Corp., Ltd. (13.4%), Cathay Life Insurance Co., Ltd. (9.2%) and the vice chairman of the board and CEO, Kong Fanxing (7.2%). The remaining shares are owned by the public. KEY RATING DRIVERS Far East Horizon's ratings are driven by its adequate risk appetite, which features effective underwriting policies and process, strengthened risk control and contained market risks. The ratings also reflect its satisfactory funding and liquidity profile, asset quality and franchise. The company has a stable management team, which has executed a well-developed strategy and achieved its business targets and financial objectives. The company has a consistent strategy, which contributes to the steady, progressive development of its franchise and corporate culture. Far East Horizon has an institutionalised and well-defined risk management system. Risk control has been progressively enhanced, while asset quality has held up steadily and compares stronger than that of Chinese banks. There have been no major control or compliance incidents in the last few years. The company has modest appetite for market-risk exposure and has kept interest rate and currency risk exposures low, while actively managing its asset/liability match. The company has been improving its funding base with solid access to diverse funding channels. Its established market presence allows it to tap the debt market with adequate flexibility. For instance, Far East Horizon is one of China's largest asset-backed securities issuers, with 14 issuances totalling CNY35 billion in 2015 and 2016, accounting for about 24% of total asset-back securities issuances in the market. It also has a diversity of debt issuances, with issuances in both onshore and offshore markets. We expect Far East Horizon to sustain its satisfactory asset quality, reflecting its focus on non-cyclical and livelihood-related industries, diversified finance portfolio and adequate underwriting risk controls. The company's receivables composition manifests its strategic focus on domestic consumption-related industries and public service sectors, which have lower cyclicality and reliable cash flow, and are in line with government policy and demographic trends. Healthcare, education, and infrastructure accounted for the majority of Far East Horizon's receivable portfolio at between 54% and 56% from 2012 to June 2016. Far East Horizon maintained its non-performing asset ratio at a healthy 0.6%-1.0% from 2010 to June 2016, while impairment charges have remained below 100bp. Actual losses are markedly smaller, as Far East Horizon has high recovery rates on its non-performing assets. The company has established itself as one of China's largest leasing companies with leading positions in healthcare and education. Far East Horizon fills a market niche in leasing items in small amounts, such as hospital equipment, while most other large leasing companies serve as the leasing arms of their state-bank parents and target big-ticket items, such as aircraft and infrastructure projects. It also offers advisory and brokerage services by leveraging its experience and expertise in various industries, thus transforming itself into a competitive one-stop solution house beyond a pure financing company. This helps generate substantial non-interest income and increase customer loyalty. We see the value-added services as protecting profitability and the customer-base amid keen competition. The Stable Outlook on Far East Horizon's IDR reflects our expectation that its performance and strategy remain unchanged. RATING SENSITIVITIES An upgrade is not probable in the short term. However, a major improvement in Far East Horizon's funding profile, including securing a stable funding pool and extensive advancement in its market status, could result in a rating upgrade. The ratings may be downgraded if there is an opportunistic shift in Far East Horizon's business model toward greater risk-taking without a commensurate increase in risk buffers. China's operating environment is developing and is less stable, which could limit an improvement in the company's credit strength and potentially undermine its perceived funding strengths. Contact: Primary Analyst Leo Wah, CFA Director +852 2263 9951 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central Hong Kong Secondary Analyst Katie Chen Director +886 2 8175 7614 Committee Chairperson Mark Young Managing Director +65 6796 7229 Date of relevant rating committee: 8 March 2017 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here Global Non-Bank Financial Institutions Rating Criteria -- Effective July 15, 2016 – March 10, 2017 (pub. 15 Jul 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1020888 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below