GL Q4/16 Profits Break New High

14 Feb 2017

Fast-growing SET-listed digital finance firm Group Lease Public Company Limited (GL) has posted net profits of 324.4 million baht in the three-month period ending 2016, which marks a new record high for the ninth consecutive quarter. Adding that to the 738.4 million baht profits in the first nine months of the year, all-year 2016 profits topped 1,062.8 million baht, which represents a whopping 82.34% increase from the year before.

The all-year 2016 profits, which exceeded the management’s target of 1 billion baht, reflected improved financial performance in all the markets in which GL operates, particularly in the two key traditional markets of Thailand and Cambodia.

Significantly, the Q4/16 profits also took into account, for the first time, profit contributions from the listed Sri Lanka finance firm Commercial Credit & Finance (CCF), in which GL acquired a 29.99% stake since late last year.

In spite of the record-high profitability in 2016, GL chairman and chief executive Mitsuji Konoshita declared that the group’s performance will be even stronger in 2017 because of a combination of organic growth and more mergers & acquisitions (M&A).

For a start, GL will be able to consolidate full-year profits from its 29.99% stake in CCF. “CCF has a very successful operation; the company is making more profits than previously projected,” Mr. Konoshita stated. CCF’s previous estimates of US$ 30 million net profits for 2017 have now been revised upward to US$ 32 million.

Sri Lanka aside, GL’s operations in Myanmar are taking off on a full scale this year after the group took over full ownership of a micro-finance firm BG Microfinance Myanmar (BGMM) and struck a strategic partnership with Myanmar whisky tycoon Aung Moe Kyaw who also owns Century Finance, a local finance firm licensed by Myanmar’s central bank.

According to Mr. Konoshita, BGMM which now operates more than 30 branches in various parts of Myanmar is expected to extend small-scale and group loans totaling US$ 50 million this year while another GL joint venture with Century Finance which focuses on providing “channeling” services (securing clients on a fees-based basis for Century Finance) is expected to lend about the same amount of US$ 50 million. If these targets are met, the two operations would generate total portfolios worth a combined US$ 100 million.

Meanwhile, GL Finance Indonesia (GLFI) is reported to be expanding aggressively after taking off late last year. Mr. Konoshita reckoned the Indonesian portfolio will top US$ 200 million this year, comprising of various types of consumer and micro financing loans. Being the largest market in ASEAN with more than 250 million population, GLFI is projected to make substantial profit contributions to the group in the years to come.

As for the Cambodian market which has surpassed Thailand to become the biggest profits contributor to the group, Mr. Konoshita expected that GL Finance (GLF, the group’s wholly-owned subsidiary in Cambodia) will roughly double its outstanding portfolio to about US$ 400 million by end-2017.

Cambodia has become the success story for GL. Through an exclusive franchise with Honda, the most popular motorcycle brand there, GLF has dominated the motorcycle leasing market and expanded to cover Kubota agricultural machineries and solar panels. GL’s IT team has also developed a highly efficient and cost-effective digital finance platform which is now being applied in all other GL markets.

The GL chairman maintained that with GL’s digital finance platform and its efficient IT system, the group can expand very fast to new markets. The group now operates in seven countries – namely Thailand, Singapore, Cambodia, Laos, Myanmar, Indonesia and Sri Lanka. Mr. Konoshita has announced earlier that it will expand to 13 new markets in Africa and Eastern Europe this year, bringing GL’s corporate footprint to cover a total of 20 countries.

The aggressive expansion plan is crucial to GL’s strategic goal to become a “global” company.