Aeon Thana Sinsap (Thailand) Plc (AEONTS) expects the net profit contribution of its four Asean subsidiaries to double in the next 3-5 years from the current 5% as the business diversifies.
The two regional networks in Cambodia and Vietnam, with Aeon owning 100% and 20%, respectively, began showing a net profit last December after more than two years in operation.
Managing director Yasuhiko Kondo said the two affiliates contributed 5% of the company's net profit in fiscal 2013 ended Feb 28.
Last year, the Vietnamese branch posted a net profit of 50-60 million baht, while Cambodia posted 10-15 million.
The key product offerings in the neighbouring markets are motorcycle hire-purchase loans, electrical goods and mobiles.
The other two wholly owned regional subsidiaries in Myanmar and Laos, both of which started up last year, are forecast to begin generating a net profit in two years.
Aeon, a Japan-based conglomerate, has also expanded its retail business in Asia with the Aeon mall concept.
Apart from Aeon malls located across Japan, the company has malls in China, Indonesia, Cambodia and Vietnam.
Mr Kondo said Aeon does not need to increase capital to support expansion of its four regional subsidiaries, as it has strong cash flow and potential funding already.
The company's liabilities total 50 billion baht, mainly in the form of bank loans and debentures.
"With cash flow of 7-8 billion baht a month, it is enough for existing debt payments," said Mr Kondo.
For its Thai operations, Aeon targets loan growth of 10% this year from an overall loan portfolio of 50 billion baht covering personal loans and credit cards.
The company's year-to-date loan growth is on track despite the sluggish economy and political turmoil.
The biggest portion of customers (60%) is upcountry, which has experienced less of a political impact.
Shares of AEONTS closed yesterday on the Stock Exchange of Thailand at 88.25 baht, unchanged, in trade worth 5.93 million baht.