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Fitch Ratings-Taipei/Hong Kong/Singapore-11 June 2009: Fitch Ratings has today affirmed the ratings of Taiwan’s Ta Ching Securities Co., Ltd. (TCS) as follows:
TCS: National Long-term rating at ‘BBB+(twn)’, National Short-term rating at ‘F2(twn)’, Individual rating at ‘D’, and Support rating at ‘5’. The Outlook is Stable.
TCS’s ratings are constrained by its small franchise and volatile profitability. However, the ratings also factor the company’s low leverage and good asset quality. TCS focuses on domestic retail brokerage, which is volatile by nature but profitable due to good margins in associated margin lending activities. Nevertheless, poor market turnover and index performance in 2008 made TCS report a full year loss (ROE of -8.1%), its first annual loss since 1998. As the market recovered strongly since 2009, the company’s net profit improved notably to TWD130m (4% of equity) in the first four months of 2009. Although volatile market conditions may increase uncertainty on its bottom-line performance, Fitch notes that TCS has a very strong capital base capable of absorbing large unanticipated trading losses. The company also has low financial leverage with an equity/asset ratio at 48% at end-2008 and it maintains an adequate liquidity buffer. Its current assets sufficiently covered current liabilities by 2.18x at end-2008.
TCS a small securities firm in Taiwan. The Ta Ching Group remains the major shareholder of TCS, controlling 65% of TCS.
For further details, please refer to the credit update report on TCS, available on www.fitchratings.com.
Contacts: Yuchi Fan, Sophia Chen, Jonathan Lee, Taipei, +886 2 8175 7600.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.
