Thitikorn closes in on Myanmar firm

Thitikorn closes in on Myanmar firm

Prapol: Part of long-term strategy
Prapol: Part of long-term strategy

SET-listed Thitikorn (TK) is set to finalise the acquisition of a microfinance business in Myanmar next quarter, a move expected to lend support to the company's goal of having 30% of its loan portfolio come from neighbouring countries by year-end 2020.

TK, a leading motorcycle hire-purchase provider in Thailand, is in the process of acquiring Myanmar Finance International Ltd (MFIL).

The acquisition will provide a significant growth opportunity for TK's total loan portfolio, aligning with the company's long-term goal to increase its regional loan portfolio to 50% of the total and become a leading motorcycle hire-purchase provider in Asean, said deputy managing director Prapol Phornprapha.

Total investment in the microfinance business in Myanmar is no more than 450 million baht, with funding mostly from TK's cash flow, worth around 950 million.

After this acquisition, TK will have 13 additional branches with 70,000 customers to provide microfinance services in Myanmar.

The company expects the loan portfolio size for its Myanmar business to be around 400-500 million baht next year, but there is still plenty room to grow as the Myanmar market is a blue ocean with total population of 53 million, he said.

The outstanding loan portfolio is valued at 6.13 billion baht, divided into a domestic portfolio of 4.7 billion and 1.43 billion from neighbouring countries.

TK has business operations in Laos and Cambodia. With the acquisition, the company expects to have 32 branches in the three neighbouring countries by year-end.

Mr Prapol said non-performing loans (NPLs) at the end of March were 5.7%, up from 4.5% at year-end 2019, due to an economic slowdown and the impact from the lockdown measures.

"NPLs will continue rising if the virus outbreak has a second or third wave, but the company has already prepared reserve provisions for the uncertain situation," he said.

TK also has a debenture to roll over in August worth around 1 billion baht. The company plans to use internal cashflow for interest and principal payment in case of rollover difficulties, said Mr Prapol. The company can also borrow from banks as its debt-to-equity ratio remains low at 0.6 times.

"Several uncertainties make it impossible to predict our revenue and net profit. The second quarter should see a greater impact than the first quarter from lockdown measures," he said.

TK reported net profit of 101 million baht in the first quarter, down 10% year-on-year. Full-year net profit logged 504 million baht in 2019.

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