Japanese takeover of BAY translates into windfall for GL

25 Jun 2013

The anticipated takeover of BAY by Japanese bank Mitsubishi will translate into a huge windfall for SET-listed motorcycle leasing firm Group Lease Public Company Limited (GL) since it will be able to take over a big chunk of the leasing business currently handled by G.E. Capital, the major shareholder group in BAY which is reportedly selling out to the Japanese bank.

This upbeat assessment was made today (June 25, 2013) by GL chairman and chief executive Mitsuji Konoshita as the Thai stock market awaits a formal confirmation from the Japanese bank on the takeover of the G.E. stake in BAY. “G.E. used to be active in motorcycle leasing in Thailand. But the Japanese bank (reported to be buying G.E.’s stake in BAY) is not interested (in the retail leasing business). Therefore, this will create a great opportunity for us to expand our market share,” Mr. Konoshita stated.

Thailand’s motorcycle leasing business has slowed down at present due to the onset of the rainy season, but Mr. Konoshita contended that GL is bucking the market trends by continuing to record strong sales growth, thanks to the company’s growing number of new dealers that bring in more business despite a tapering off in sales by old dealers.

GL’s monthly sales rose to about 8,500 in May (up 44% from 5,900 in May last year) while the numbers are expected to rise another 3% this month (up 56% from 5,600 in June last year). The company is on course to hit the revised monthly sales target of about 12,000 towards year-end, Mr. Konoshita stated.

GL reported a solid 63.6% growth in net profits in the first quarter this year to 91.3 million baht. The pace of growth in net profits is expected to ease somewhat in the current second quarter as the company streamlines its back-office operations and enhances its IT systems to support further rapid expansion. Mr. Konoshita was confident GL will swing back to the aggressive growth path from the third quarter onwards.

Meanwhile, GL’s operations in Cambodia, undertaken by its wholly-owned subsidiary GL Finance (GLF) – are on course to start rolling full-scale in the third quarter with monthly targeted sales of 2,000 units. Because Cambodia is a virgin market where the leasing business is entirely new, GLF is proceeding with a “slow-but-sure” strategy with thorough preparations to ensure maximum efficiency. Trial operations so far with about 200 clients have proven highly satisfactory – with 0% NPL except for two stolen cases.

To tap the huge market potentials in Cambodia where GLF has exclusive rights to distribute the popular HONDA brand, the company has now built up a network of 15 branches including three new branches outside Phnom Penh (two in Battambang and one in Ratanakiri).

The Cambodian operations will start to make significant revenue contributions to GL in the third quarter. At the same time, the third quarter will also see a significant pick-up in bottom-line numbers because of other expected positive developments, notably the likely conclusion of ongoing negotiations for GL’s takeover of sizable micro-financing operations in Cambodia.

GL this week is hosting the Bangkok visit by a senior delegation from the National Bank of Cambodia (NBC), led by the NBC’s First Deputy General of Banking Supervision Ms. Chea Serey. The delegation was scheduled to visit the Stock Exchange of Thailand (SET) today where they would hear briefings on the Thai stock market overview by SET’s Executive Vice President Mr. Chanitr Charnchainarong and focused briefings on Thailand’s leasing business.