Business Sector: Finance and Securities

Company Rating: Unrated

Issue Rating: Unrated

Listed Status: MAI

Summary:

• KCCH, the parent company of KCCAMC and KCCAR, has experienced a slight decrease in operating income. However, the core business continues to grow well, with a focus on increasing investments in high-yield NPL (Non-Performing Loan) portfolios. The company has a strong financial position with cash of 304 million Baht but still needs to rely on additional borrowing.

KCCH Bond

• Company Overview Knight Club Capital Holding Public Company Limited (KCC) was incorporated as a public company in August 2023 to operate as a holding company by investing in other companies. KCC holds 99.73% of the shares in Knight Club Capital Asset Management Company Limited (KCCAMC), which operates in the business of managing non-performing assets (NPLs). KCCAMC acquires or takes over NPLs from financial institutions and financial businesses, then restructures the debt and manages real estate for sale (NPA) to develop and sell them further.
• Additionally, KCC operates its core business by holding 100% of the shares in KCC Asset Recovery Company Limited (KCCAR), which manages non-performing assets (NPLs) by acquiring or taking over NPLs, such as purchasing non-performing bonds or trade receivables from individuals or non-financial institutions. These assets are then managed, restructured, and sold for further development.
• Revenue source comes from 1) The management of non-performing assets include Interest income from loans granted through the purchase of receivables, profits from debt collection, and profits from the sale of loans purchased from receivables, etc.; 2) Profit from the sale of real estate for sale, where the company has created added value by improving the assets to make them usable and ready for sale to external parties. Additionally, there is 3) Income from other operations, such as income from asset management services, interest income from banks, and other sources.

• Financial performance the total revenue from the three sources of operation mentioned above is 185.7 million Baht in 2024. The majority of this revenue will come from the management of non-performing assets, accounting for more than 93%, or 172.8 million Baht. This is followed by profit from the sale of real estate for sale, valued at 9.5 million Baht (5%), and other income. The net profit is recorded 81.8 million Baht.

• However, the company’s operating revenue has decreased slightly by 2.8% YoY, mainly due to a 58.3% YoY decline in net profit from debt collection, which stood at 10.98 million Baht compared to 26.35 million Baht in 2023. This profit is typically recognized when the company receives amounts exceeding the purchase price of the receivables and interest payments from debtors. Additionally, profit from the sale of real estate for sale decreased by 32.7% YoY. At the same time, net profit decreased by 2.8% YoY due to higher interest expenses from issuing bonds to purchase additional non-performing assets (NPLs).
• Despite the slight decrease in overall revenue, the company’s core income, such as interest income from loans granted through the purchase of receivables, grew by 17.3% YoY, reaching 159.8 million Baht. This is due to the company increasing investments in high-yield NPL portfolios and expanding its portfolio, reflecting the company’s potential to generate long-term revenue and returns.
• Financial Position the company has seen an increase in cash flow from operations, resulting in cash and cash equivalents of approximately 304 million Baht at the end of 2024. The Debt-to-Equity (D/E) ratio stands at 1.06 times, and the Interest-Bearing Debt-to-Equity (IBD/E) ratio is at 1.00 times, indicating that most of the debt is interest-bearing, primarily in the form of corporate bonds, accounting for 88.5% of all interest-bearing liabilities.
• The company is in a good position to pay interest, as reflected in an Interest Coverage Ratio (ICR) of 2.14 times. However, the Debt Service Coverage Ratio (DSCR) is at 0.26 times, meaning that the company’s EBITDA can only cover 26% of its debt obligations (both interest and principal) due within one year. As a result, the company needs to rely on new borrowings, such as issuing bonds.
• KCCH bonds to institutional investors, high-net-worth individuals, and/or large investors. These are high-risk, unsecured, non-subordinated bonds with a maturity of 1 year, 11 months, and 29 days, offering a coupon rate of 6.00% per year, with interest paid every 3 months. The subscription period is from April 8-10, 2025. The company has no credit rating, and the purpose of this bond issuance is to provide loans to its subsidiaries to purchase non-performing assets and serve as long-term working capital.
• Financial Covenants the company is required to maintain an Interest-Bearing Debt-to-Equity (IBD/E) ratio according to the bond terms, not exceeding 2.5 times as of the end of the fiscal period.

Source: ThaiBMA

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