Despite the economic slowdown in Thailand which has resulted in stagnated domestic sales, SET-listed motorcycle leasing firm Group Lease Public Company Limited (GL) has reported new record-high profits in the second quarter ending June this year – thanks largely to its booming business in Cambodia.

Consolidated net profits shot up to 129.47 million baht in this period, an astronomical jump of 1,765% from the second quarter in 2014 when net profits were at a low point of 6.94 million baht. On a quarter-to-quarter basis, the latest numbers also represented a 17.4% increase from the net profits of 110.24 million baht in the first quarter this year.

The new record-high profits reflected smaller provisions for bad and doubtful debts, lower losses from the sale of compounded vehicles and, most importantly, much stronger profit contributions from GL’s overseas operations, especially those from Cambodia.

“Our strategic move into CLMV (Cambodia, Laos, Myanmar and Vietnam) has started to pay off. And as our expansion (into the region) gathers momentum, we expect even better days ahead,” stated GL chairman and chief executive officer Mitsuji Konoshita.

The second quarter is normally the low season for the company because of the long Songkran holidays in April. As such, the company’s senior management has projected better numbers in Q3 and even stronger profits growth in Q4 which is traditionally the high season.

Consolidated revenue from hire-purchase interest income topped 471.48 million baht in Q2 this year, up 29.11% from the same period last year. But “other incomes”, including those derived from better management of bad- and doubtful-debt provisioning, shot up from 25.46 million baht to 133.64 million baht over the same period.

Mr. Konoshita said GL has adopted a conservative policy on its Thailand operations in light of the domestic economic slowdown, focusing mainly on quality rather than quantity. Against the outstanding Thailand portfolio of about 5 billion baht and monthly sales of 4,500 units, the company has been able to bring down the rate of non-performing loans (NPLs) from a high of 11% last year to 7% now with a year-end target of 5%

But contrary to the lackluster Thai situation, the leasing business in Cambodia – undertaken by GL Finance (GLF), a wholly-owned subsidiary – has been growing strongly for both HONDA motorcycles and KUBOTA farm machineries.

Mr. Konoshita noted that the Cambodian operations are very cost-effective thanks to a combination of low NPLs (only 0.4%), low operating costs (only about one third that of Thailand) and a very efficient E-Finance system of credit evaluation uniquely developed by GL. These are enhanced by an elaborate nationwide network of more than 160 POSs (Points of Sales) that operate alongside HONDA and KUBOTA dealers.

With an outstanding portfolio of about 30,000 motorcycles and monthly sales of about 1,700-1,800 now rising to a projected 4,000 by year-end, Mr. Konoshita has forecast that profits from Cambodia will surpass that of Thailand within next year.

Meanwhile, GL’s Lao operations which took off recently are expected to reach break-even point in September and begin making profits contribution in the last quarter. Conducted through a network of 40 POSs both in Vientiane and provincial areas, the Lao operations are taking a much shorter period to turn around into profitability because it is adopting the successful model developed in Cambodia.