True Money to Boost GL Sales in Cambodia
SET-listed digital finance firm Group Lease Public Company Limited (GL) is forecasting a major boost to its already flourishing business in Cambodia through a new partnership with True Money, a mobile-payment subsidiary of True Corp in Thailand, that will significantly increase the sales of GL’s financial services via True Money’s extensive network of about 5,000 agents spread out nationwide in Cambodia.
GL Finance (GLF, GL’s wholly-owned subsidiary in Cambodia) currently operates about 240 Points of Sales (POS) of its own in all parts of the country. “As a result of the new partnership, the 5,000 or so True Money small shops will become our sales agents. This will immensely improve our marketing and sales capability – without increasing our fixed costs,” stated Tatsuya Konoshita, chairman of GL’s executive committee. The True Money small shops are located even in small rural villages which will help extend GLF’s outreach to those areas.
Cambodia is already a key market for the GL Group. Of the 255.85 million baht net profit in Q2 this year, about 120 million baht was contributed from the operations in Cambodia and the profit number represents a three-fold increase from the roughly 40 million baht profit in the same quarter last year.
Mr. Tatsuya expected that the number of applications for loans will increase by about 50% in the fourth quarter this year as a result of the stepped-up sales drive through the new partnership with True Money and that the total number of loan applications next year will likely double – to be split half-half between GLF’s own POS and the True Money agents.
Calling it a win-win partnership, GLF CEO Riki Ishigami said: “I strongly believe our driving forces and cross-selling services shall provide us in the broader markets with big capacity to expand and operate successfully, particularly new opportunities for GLF to acquire a vast number of customers through True Money agents who can get commission in return, increase customer foot traffic which will boost usage of True Money’s money transfer services.”
The GLF CEO signed a memorandum of understanding (MOU) with True Money (Cambodia) Limited Managing Director Kong Mean in Phnom Penh on August 26 and the new partnership will become effective beginning September 1.
Parts of the Joint Cooperation Statement read: “GLF’s target customers are grassroots people who are mostly un-banked and in fact (they are) also True Money’s target customers. This mutually beneficial cooperation will create strong and unique synergies for GLF, True Money and its agents and thus, deliver robust business growth …”
Typically, the True Money shop operators who will from now double up as GLF’s sales agents will download GL Digital Finance Application (GL’s own-developed digital finance platform which has been successfully used in Cambodia) onto their smart phones, input prospective GLF clients’ information and send to the nearest GLF POS offices immediately. Then, GLF’s local-area credit officers will visit the potential clients to evaluate the loan applications. “This way, we can also fully utilize our staffs since our credit officers can visit 2-3 clients a day while at present they just visit on average 0.25 client daily,” Mr. Tatsuya said.
He added that even at the current rate of staffs utilization, GLF is already making good profits and therefore, the more effective staffs utilization will generate better results. Each GLF POS is staffed with 3 credit officers.
GLF at present handles financing for about 3,000 Honda motorcycles per month, which represents just 10% of the total motorcycles market in Cambodia. “The other 90% of the market is bought and sold in cash. This means there is enormous room for growth for our financing services,” Mr. Tatsuya said. Honda is by far the most popular brand in Cambodia and GLF has enjoyed a virtual monopoly because it has the exclusive rights to arrange financing for all Honda sales.
GLF also enjoys a virtual monopoly in the leasing of Kubota agricultural machineries in Cambodia where there is also huge growth potentials for this business since only about 20% of the total agricultural-machinery market is conducted through financing while the remaining major part of 80% is also cash-based. Meanwhile, the financing of solar panels is still a relatively new business and as such, there appears to be massive growth potentials.
The new alliance with the 5,000 True Money agents, Mr. Tatsuya noted, will accelerate the sales of solar panels in particular.
GL Q2 Profits Nearly Doubles from Last Year
15 Aug 2016
Thanks to very strong performance both in Thailand and particularly in Cambodia and Laos, SET-listed digital finance firm Group Lease Public Company Limited (GL) has reported a staggering 255.85 million baht profit in the second quarter this year which nearly doubles from the same period last year.
The Q2 numbers are a new record high and represents the seventh consecutive quarterly new record-high profits. Given the positive economic outlook in Thailand and the region – plus the fact that GL’s new subsidiary in Indonesia, PT Group Lease Finance Indonesia (GLFI), has started operations — senior management has expressed confidence that the company will be able to continue the momentum of making new quarterly record-high profits well into the future.
“We had made projections in the past that our net profits of more than 500 million baht last year will double to 1 billion baht this year,” stated GL’s Executive Committee chairman Tatsuya Konoshita. “We are now quite confident that we will be able to achieve that.” Adding the 222.17 million baht net profits in the first quarter this year to the latest numbers, total profits in the first half-year period amounted to 478 million baht.
The 255.85 million baht Q2 net profits was 97.6% more than the 129.47 million baht net profits in the same quarter last year. Of the latest number, roughly 105 million baht came from the Thailand operations (representing about 17% growth) while the remaining 150 million was contributed from GL’s operations in Cambodia and Laos.
Mr. Tatsuya noted that the estimated 120 million baht profit from Cambodia was particularly outstanding as it roughly tripled from the 40 million baht profits in the same period last year. Meanwhile, GL Laos and Thanaban contributed about 15 million baht profits each in this quarter. GL Laos has been operating since September last year while Thanaban in Thailand was acquired by GL in 2014.
Mr. Tatsuya explained that although Laos is a small country, it will significantly make roughly 10 million baht profits contribution per month from within this year. “In Laos, we are by far the top market leader in the financing of Kubota agricultural machineries and motorcycles,” he said.
Since the operations in Indonesia are just starting, Cambodia will remain the star performer of the GL group in the foreseeable future. Mr. Tatsuya noted that the performance of GL Finance (GLF, the Cambodian subsidiary) in Q2 could have been much better if it had not been for the slowdown of motorcycle sales caused by the implementation of a 10% Value Added Tax (VAT) and the negative impact of a drought similar to that in Thailand.
The Cambodian government has been charging the VAT for a long time but only began strictly enforcing it for motorcycle sales in April this year which has caused some market disruptions. But after the initial adjustment, the market situation has now returned to normal while the drought was also over.
“Therefore, we expect strong recovery in the Cambodian market – and hence our performance there – in the third quarter and thereafter,” Mr. Tatsuya stated. Through a cost-effective and highly efficient digital finance platform developed by itself, GL has been very successful in expanding the financing business for HONDA motorcycles, Kubota agricultural machinery and extending loans for small and medium enterprises (SMEs). The same digital finance platform has now been adopted in Laos and Indonesia making the Lao operations profitable only after four months after the launch of business.
Meanwhile, Mr. Tatsuya stated that the Indonesian business looks highly promising. From its ‘test’ Point of Sales (POS) in southern Sumatra, GLFI signed two contracts for the leasing of agricultural machinery on July 25, the first day when the company formally commenced operations in Indonesia, while also receiving 12 loan applications on the same week.
“This is a very promising start,” Mr. Tatsuya said. The latest entry into the Indonesian market marks an important turning point that will support the company’s next phase of major expansion because of the huge business potentials from Indonesia’s over 250 million population. “We are the financial specialist for rural areas and much of Indonesia is rural because it has about h12,000 islands,” Mr. Tatsuya said. GL Chairman and Chief Executive Officer Mitsuji Konoshita has stated before that the Indonesian market will be ten times the size of the Cambodian market.