Thitikorn keeps gaze on foreign lending

Thitikorn keeps gaze on foreign lending

Domestic market still highly competitive

SET–listed Thitikorn Plc (TK), a leading hire-purchase provider of motorcycles, aims for a twofold increase in loan growth for its overseas business unit, propelled by branch expansion and a new operating licence in Myanmar.

But total revenue is projected to grow 6% this year, the same as 2018, because of low farm prices and unstable politics, with slower global economic growth pressuring private consumption and consumer spending.

Deputy managing director Prapol Phornprapha said the company has hire-purchase and leasing businesses in Laos and Cambodia, with its operation in Myanmar expected to begin in the second quarter once a new operating licence is obtained.

Thitikorn plans to open 13 new branches this year -- six in Cambodia, three in Laos and four in Thailand -- bringing the total to 97 branches.

The company's total client base is around 300,000 loan accounts.

Although the low interest rate environment is a boon for leasing and hire-purchases businesses in the short run, low crop prices, government instability and slower global economic growth are having an adverse effect on new auto and motorcycle sales this year, said Mr Prapol.

He said the company will start its microfinance business in Myanmar once it obtains a licence.

It also plans to apply to operate a leasing business in other neighbouring countries.

"We predict business expansion opportunities in neighbouring countries that have plenty of growth, while the domestic market remains highly competitive and the profit margin is narrow compared with foreign business," said Mr Prapol.

The company previously planned to increase its overseas revenue to equal the domestic share by next year, but that ambitious target has been postponed because of delays in getting its Myanmar licence, he said.

Revenue proportion from the company's overseas businesses accounted for around 10% or 900 million baht of total revenue in 2018. Such proportion is expected to rise to 20% or 1.8 billion of total revenue in 2019.

Thitikorn's Cambodia business unit saw a rise in loans by some 144% year-on-year, with a 200% year-on-year increase in revenue.

The Cambodian unit represents 78% of total revenue from foreign business.

For Laos, the company's loan growth expanded by 85% year-on-year and revenue increased by 64% year-on-year in 2018.

Total domestic loans were valued at 9.22 billion baht last year, of which 8.76 billion were motorcycles and 466 million were cars.

Total foreign loans were valued at 890 million baht, mostly stemming from motorcycles.

Non-performing loans (NPLs) in both Cambodia and Laos were less than 0.66% in 2018, while total NPLs stood at 4.1%, mainly coming from the domestic market.

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