Asia Link Finance explores funding options

Published January 18, 2022, 2:42 PM

by James A. Loyola

Asia Link Finance Corporation (Asialink) has obtained an Issuer Credit Rating of PRS A plus (corp.), with a Stable Outlook, from Philippine Rating Services Corporation (PhilRatings) while it explores funding options.

Asialink offers unsecured and secured credit facilities that cater to the financial needs of businesses, particularly small and medium enterprises (SMEs), and individuals, without engaging in quasi-banking (QB) functions.

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Incorporated in 1997, the company is reportedly one of the fastest growing financing companies in the Philippines, with 86 branches nationwide.

“Moving forward, the Company plans to also grow its funding sources through diversification, tapping the capital markets via a possible short-term debt issuance,” said Philratings.

An Issuer Credit Rating is a measure of the general creditworthiness of a company over a one-year period. A company rated ‘PRS A’ has an above average capacity to meet its financial commitments relative to that of other Philippine corporates.

The company, however, is somewhat susceptible to adverse changes in circumstances and economic conditions than higher-rated corporates. The “plus” further qualifies the assigned rating.

On the other hand, a Stable Outlook is defined as: “The rating is likely to remain unchanged in the next twelve months.” In assigning the rating and its Outlook, PhilRatings has taken into account Asialink’s target market, the SMEs sector, faces significant challenges, given economic uncertainty and the immediate adverse impact of the COVID-19 pandemic.

It also factored in the company’s aggressive loan book growth resulting in strong income generation; high share of standard grade and substandard grade loans to customers for the past three years; and shareholder commitment and experienced management team.

The Company’s total assets showed a generally increasing trend from ₱1.9 billion as of end-2016 to ₱5.5 billion as of end-2020, for a compound annual growth rate (CAGR) of 29.9 percent.

The annual growth was mainly attributable to net loans to customers account, which was the biggest asset component with an average share of 90.7 percent during the historical period. Net loans to customers steadily grew from ₱1.6 billion as of end-2016 to ₱5.2 billion as of end-2020, with a CAGR of 33.5 percent.

Given the growth in the Company’s loan book, Asialink posted increasing revenues and net income from 2016 to 2020.

Total revenues consistently grew from ₱770.5 million in 2016 to ₱1.6 billion in 2020, representing a CAGR of 20.7 percent.

Net income, on the other hand, expanded from ₱95.0 million in 2016 to ₱215.6 million in 2020, for a CAGR of 22.7 percent.

 
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