Heng considers expansion plans after SET listing

Heng considers expansion plans after SET listing

Auto loan provider's chief executive says she is pursuing an inorganic growth strategy

"Banks have also been entering into this market segment because it has more room to grow. This has sparked intensifying competition in the segment." — Sutharntip Phisibuntoon, Chief Executive, Heng Leasing and Capital

Consumer loan provider Heng Leasing and Capital Plc (Heng) will expand its business through an inorganic growth strategy, the company's chief executive Sutharntip Phisitbuntoon said in an exclusive interview with the Bangkok Post.

Heng's initial public offering on the Stock Exchange of Thailand (SET) took place on Oct 19. On the first day of trading, Kasikornbank (KBank) bought 10% of Heng's shares from some of the company's existing shareholders via the Big Lot board.

Mrs Sutharntip added that other companies and other financial institutions were also interested in acquiring the company's shares.

Heng is a joint venture of four northern auto leasing service providers with more than 20 years of experience in the business, namely: Taweeheng group; Pattanasin group; Mitr Ua Aree group; and Sinpranee group.

Before the joint venture, each of them was strong in their business operations. But due to the tougher market competition and their overlapping businesses and customer bases, they decided to synergise and grow the businesses together.

The joint venture aims to strengthen their financial operation and capital base to facilitate sustainable business expansion nationwide. As a result, the four owners decided to list Heng on the SET.

The four founding groups also plan to pass the baton to the next generation to run the business in the digital era.

Presently, second-generation members of two founding groups sit on the company's board and management team, said Mrs Sutharntip, who has been made chief executive to prepare for the company's listing on the SET.

She added that even though the company has already grown the business solidly, the four founders are still ready for other new strategic partners to help expand the business.


In the consumer loan segment, auto leasing is the company's core business and it focuses only on used-car loans. It also needs more expertise, long-term experience and unique services in this business segment.

Heng plans to expand its branch network from around 451 at present to 830 outlets nationwide in 2023.

Mrs Sutharntip added that with the company's high growth potential, there are several companies and financial institutions interested in being Heng's strategic partners. Heng decided to forge a strategic partnership with KBank because of their long-term relationship and the bank's good reputation.

KBank will also support the company's business expansion for the long term.

"Although we were approached by some banks to be a strategic partner, Heng chose KBank mainly because of our strong long-term relations. KBank is now both our creditor and shareholder. It will support Heng's financial conditions and reliability, which will create greater opportunity for the company on future business expansion," Mrs Sutharntip said.

Given a stronger financial status because of the reputation of its strategic partner and a solid capital base after listing on the SET, the company will have more alternatives for funding mobilisation, including on the loan market, bond market and capital market with lower financial costs.


On average, the company's customers are those with a monthly income of around 20,000 baht, and are aged between 35-49 years old. Self-employed clients and small business owners are its key customer base, representing 30% of the total customer portfolio, followed by salarymen at 28%, farmers at 24%, corporate employees at 10% and government officers at 8%.

The credit line per borrower is between 20,000 and 200,000 baht. Most of the customers belong to the underbanked segment, who often borrow from the loan shark market.

As a result, there are still opportunities for Heng to expand its business in this customer segment to help them access formal financial services.

"Apart from non-banks, banks have also been entering into this market segment because it has more room to grow. This has sparked intensifying competition in this segment," Mrs Sutharntip said.

With strong expertise and long-term experience in the business area, Heng expects to grow the business nationwide, she added.


Mrs Sutharntip added that the company aims to increase total outstanding loans from 8.4 billion baht as of June this year to 14.8 billion by 2023, a 28% annual growth rate for the next two years. The double-digit growth target will be supported by positive demand in the auto loan market and the company's low base.

In addition, Heng plans to expand its branch network, which is mostly located in northern Thailand, from around 451 at present to 830 outlets nationwide by 2023.

Because of the unique nature of auto leasing loans, especially the used-car loan market, a brick-and-mortar branch and human resources are needed for the complicated loan service. Staff are key to forging an understanding with customers, Mrs Sutharntip said.

Heng offers both secured- and unsecured-loan products, comprising vehicle hire-purchase loans, car title loans, mortgage loans, personal loans and nanofinance.

Its auto leasing represents the company's largest portion at 65% of the total loan portfolio, followed by car title loans at 27%.

The company plans to increase the car title loan proportion to 48% and reduce auto leasing to 37% by 2023 to generate a better yield and higher income.

Mrs Sutharntip said that even with an ambitious loan growth target, the company plans to cut the non-performing loan ratio to 3.2% in 2022 and 2.9% in 2023, from the current 3.68%.

A larger loan portfolio and strong risk management will support the bad debt reduction, she added.


Besides physical branch expansion, the company has been developing a digital platform to offer services and to lower operating costs in the digital age, Mrs Sutharntip said.

The company is scheduled to launch Heng Digital Platform in the first quarter of 2022, initially focusing on being a communications channel with customers. It plans to offer a digital personal loan as a pilot project in the third quarter of next year.

The company is expected to take more time to put an auto loan service on the digital platform. However, given the unique and complicated nature of the auto loan business, a digital platform alone will not be enough to respond to customers' real demand.


Besides focusing on business expansion across the country under its mid-term plan, the company is also considering a move into regional markets, focusing on Cambodia, Laos, Myanmar and Vietnam as part of the next step.

But first the company is concentrating mainly on strengthening operations in Thailand and building up a strong infrastructure base, including the digital platform development, because there is room to grow the business in the country.

The company plans to spend 70-90 million baht on IT investment to offer a digital loan service next year, Mrs Sutharntip said.

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