Group Lease to lean on Cambodia, Laos

Group Lease Plc (GL), a SET-listed motorcycle lender, is aiming for 50% loan growth this year backed by projected solid credit growth in Cambodia and the launch of its leasing business in Laos this quarter.

The company expects new loans will surge by 50% from 6.3 billion baht last year, said GL chairman and chief executive Mitsuji Konoshita, adding that 2.7-3 billion in new loans would come from motorcycles and its partner Kubota Tractors’ leasing business in Cambodia.

GL has had a presence in Cambodia for two years and sees plenty of growth potential there, as Cambodia’s leasing business is 20 years behind Thailand, he said.

Net profit from leasing in Cambodia is expected to increase significantly to 100 million baht a month next year, compared with flat net profit growth of its business in Thailand at 150 million baht a quarter in 2016.

“The Cambodian market offers a high profit margin, while non-performing loans are very low,” he said.

GL’s lending growth in Thailand is expected to expand 10-15% this year, assuming motorcycle sales dip to 1.7 million units from 2 million in past years after reaching the saturation point.

With the success in Cambodia, GL will start penetrating the leasing and microfinancing business in Laos this quarter, he said.

GL is among Thailand’s top three motorcycle leasing firms and its subsidiary GL Finance (GLF) has struck a Cambodian partnership with Honda to provide financing to customers at its dealerships.

The company is also keen on expanding into Myanmar and Vietnam. It views Myanmar as the world’s new growth centre and plans to start its operations there next year. GL is in talks for a possible takeover of a leasing and finance-related business in Vietnam.

The company is also studying offering nanofinancing business in Thailand and Cambodia in the future.

The Bank of Thailand recently opened applications for nanofinancing businesses to non-financial institutions. Operators with registered capital of 50 million baht will be eligible to offer nanofinancing provided their debt-to-equity ratio does not exceed seven times their registered capital. If the ratio does exceed the threshold, operators have until Jan 23, 2016 to reach the specified ratio.

Non-bank lenders have to gain the finance minister’s approval after sending in an application.

The company posted a net profit of 93.76 million baht in the fourth quarter last year, up 606% year-on-year, compared with 21.5 million in net profit during the first nine months.

GL’s shares closed on the SET yesterday at 6.10 baht, up 60 satang, in trade worth 33 million baht.