Following the establishment of a thriving business in Cambodia, SET-listed motorcycle leasing firm Group Lease Public Company Limited (GL) is now expanding its profitable motorcycle and farm-machinery leasing business to Laos after finally obtaining a license from the Lao central bank.

Operated by GL Leasing (Lao) Co. Ltd. (GLL), a wholly-owned subsidiary, the Lao operations will take a much shorter break-even period because it is adopting the successful business model that has been developed in Cambodia while costs are absorbed by the parent company in Thailand. “While our Cambodian operations took about two years to break even, GLL will take just 6-7 months to break even,” GL Chairman and Chief Executive Officer Mr. Mitsuji Konoshita stated.

The GL chairman and other senior executives officially opened the new GLL head-office in Vientiane on May 15 after receiving the official license from the Bank of Lao P.D.R., the Lao national bank. “We are all systems go because we have been preparing this for several months and are fully ready,” Mr. Konoshita stated.

Expanding the leasing business to Laos corresponds with GL’s corporate strategy to penetrate the relatively virgin but highly profitable markets of CLMV (Cambodia, Laos, Myanmar and Vietnam). While the Thai market has become relatively more mature and competitive, the emerging markets in Thailand’s neighboring countries offer enormous growth potentials, high profit margins and extremely low non-performing loans (NPLs).

GL just posted a record-high net profits of 110.24 million babt for the first three months of this year, the highest ever quarterly profits in the company’s history. Of the total profits, about 39 million baht was from the company’s overseas operations which marked a 77% increase from the previous quarter. And the bulk of the overseas profits was from Cambodia.

Mr. Konoshita stated that the Cambodian operations are only in the early stage of success and there is plenty more growth potentials in the years to come. He added that since the business infrastructure in Cambodia has been completed and costs are kept steady, profits from now on will jump steadily in line with increasing sales. The company has forecast that profits from Cambodia will surpass that in Thailand by late next year.

The successful model in Cambodia – of motorcycle and farm-machinery leasing plus nano-financing – will now be duplicated in Laos. The GL boss explained that although Laos is smaller than Cambodia, the country nonetheless offers very strong growth potentials for both motorcycles and the KUBOTA brand of farm machineries handled by GL, especially in the rural countryside where banking services are not available.

As GL’s CLMV strategy gathers momentum, plans are underway to kick-start similar leasing business in Myanmar next year while negotiations are ongoing for the possible takeover of finance-related businesses in Vietnam.

At the same, the company has also been making serious preparations to enter the huge Indonesian markets through collaboration with an Indonesian bank owned by GL’s new strategic partner, the J Trust Group of Japan. A recent GL shareholders meeting endorsed the issuance of US$30 million worth of convertible debentures for subscription by the J Trust Group.

The new strategic partnership with the J Trust Group, which owns PT Mutiara Bank in Indonesia, is expected to pave the way for GL to enter the huge and potentially lucrative leasing and nano-finance markets of this largest member country of ASEAN.