Siam Wellness eyes China expansion
Thailand’s biggest massage and spa chain will expand its outlets in China to take its popular services closer to its largest group of customers.
Siam Wellness Group Pcl was in talks with potential partners to operate its “Let’s Relax” shops under licence in cities in the world’s most populous country, said its president and chief executive officer Wiboon Utsahajit, without specifying the number of outlets planned.
Expansion in China, where it had just one outlet, underpinned achieving the company’s annual earnings growth target of more than 20 per cent, he said.
Siam Wellness joins Thai companies, including Carabao Group Pcl and Taokaenoi Food and Marketing Pcl, in looking to leverage the Southeast Asian nation’s popularity among Chinese tourists directly in their home country.
Prime Minister Prayuth ChanOcha’s government has wooed Chinese tourists and investors to spur the economy as the trade dispute between China and the United States saps exports.
“We have conducted a very careful study and now have the confidence to expand in China,” said Wiboon.
“China is a very tough market for most foreign players, but the risk versus reward is worth it.”
About 75 per cent of Siam Wellness’s 3,000 daily customers were foreigners, and most were from China, he said.
The Chinese expansion would operate under franchise agreements with local partners, he said.
The company now has 62 outlets, with six located abroad in countries including Myanmar and Cambodia.
“Siam Wellness’s earnings are expected to hit new highs in coming years as it expands,” said Nantika Wiangphoem, an analyst at DBS Vickers Securities (Thailand) Co.
Still, risks to its outlook include the possibility of a slump in foreign tourist arrivals to Thailand, a global economic slowdown and increased competition, she said. Siam Wellness’ shares have gained 39 per cent this year, after losing almost half of their value a year earlier, valuing the company at US$294 million compared with the about US$76,000 Wiboon invested to start it up 20 years ago.
The company has the secondbiggest stock by market value in the Market for Alternative Investment, the Thai stock exchange’s bourse for 161 small and medium enterprises.