Johannesburg, 2 Sep 2013 — Global Credit Ratings has assigned Quince Capital (Proprietary) Limited initial national scale issuer ratings of A+(ZA) and A1(ZA) in the long term and short term respectively; with the outlook accorded as Stable. Furthermore, Global Credit Ratings has assigned an initial international scale rating of BBB- to Quince Capital (Proprietary) Limited; with the outlook accorded as Stable.
Global Credit Ratings has accorded the above credit rating(s) on Quince Capital (Proprietary) Limited based on the following key criteria:
Strong business model: the ratings reflect the company’s intrinsic credit strength and are based on its established rental discounting franchise, risk management practices, mono-line but profitable business model, acceptable risk based capital levels and the support from its group parent.
Group positioning: the company is viewed as strategically important to the group as it adds diversity and facilitates business flow (by enticing the client with a cradle to grave solution, no potential revenue streams are leaked). To that end, the group’s commitment is evident at every crucial business block. Therefore, the company’s ratings benefit from a one-notch uplift for extraordinary parental support.
Low credit risk: while the company is exposed to both the (client facing) franchise or dealer and the underlying customer or end-user, the combined credit quality of these are considered strong, shown by the low level of problem loans and a high recovery rate – this is further backed by modest (average) credit loss rates over the review period.
Dependable funding profile: at present the company is solely funded by its parent, a position which, given the strong balance sheet of the umbrella company, is seen as a positive; that notwithstanding, the company is exploring medium-term options to diversify its funding envelope.
Improving profits: held up by its strong pricing power (group wise) and an ability to manage/absorb asset risk, the company weathered a period of balance sheet and product consolidation (referring to its now discontinued broker-based business), shown by a rebound in earnings.
Positive movement/s: further progress in the company’s market positioning, trading performance, financial profile and portfolio collections track record (both continuing and arrears asset book) – nevertheless, rating upside potential is very limited at present.
Negative movement/s: a ratings downgrade may be triggered by a materially weakening operating environment, combined with credit losses significantly above expectations; further, higher than anticipated liquidity gaps, less stringent credit criteria, a weaker franchise or geographical diversification, as well as a downgrade of the group rating could see a revisit of the ratings.
|Sector Head: Financial Institution Ratings|
|+27 11 784 1771|
|+27 11 784 1771|
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The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.
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SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
Quince Capital (Proprietary) Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to Quince Capital (Proprietary) Limited with no contestation of the rating.
The information received from Quince Capital (Proprietary) Limited and other reliable third parties to accord the credit rating included the latest available audited annual financial statements (plus four years of comparative numbers), latest internal and/or external report to management, full year detailed budgeted financial statements, most recent year to date management accounts, corporate governance and enterprise risk framework, reserving methodologies, capital management policy, Industry comparative data and regulatory framework and a breakdown of facilities available and related counterparties.