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GL: Towards Asia's Fintech Leader
25 Sep 2017
SET-listed digital finance firm Group Lease Public Company Limited (GL) is fully committed to turning itself into a leading Fintech company in the Asian region over the next five years, its Chairman and Chief Executive Officer Mitsuji Konoshita has announced.
The company’s expansion and development towards Fintech leadership in Asia will be driven by its efficient and cost-effective Digital Finance platform, which is currently being implemented in seven Asian countries. These markets include its home market in Thailand plus neighboring Cambodia, Myanmar, Laos, Singapore, Indonesia, and Sri Lanka.
Underscoring its emphasis on IT development to support financial services, GL has doubled its IT development staffs to approximately 350 over the past half year and is constantly upgrading its IT capabilities. GL’s Digital Finance platform encompasses the entire process from the scoring of loan applicants to the payment of monthly instalments by clients.
Going forward, Mr. Konoshita is particularly bullish on the growth potential in Myanmar and Indonesia, where he has projected that GL’s loan portfolios will jump to US$1 billion and “several billions” respectively over the next five years.
Even though Myanmar and Indonesia are new markets for GL, both countries have been able to contribute to revenue and profit and Mr. Konoshita asserted that the growth potentials of both markets are enormous.
GL posted 338 million baht in net profit in the second quarter this year, representing a 32% increase from the same period last year and marking a new record-high profit for the 11th consecutive quarter. This was due to improved performance in Thailand, Laos, Myanmar, and Indonesia even though the recent performance from Cambodia has been stable. Additionally, GL’s investment in Sri Lanka continues to contribute to profit as planned. Though Myanmar operations just started this year for GL, growth has been phenomenal as the number of microfinance group loan clients jumped four-fold to about 40,000 in just five months. BGMM, GL’s wholly-owned micro-finance subsidiary, was recently granted permission by the Myanmar government authorities to extend the group loan business to six new provinces on top of the three provinces where it had already been operating. This should bring in additional clients and revenue going forward.
The Indonesian operations are also expanding rapidly. PT Group Lease Finance Indonesia (GLFI) recently signed an agreement with TATA Motor Distribusi Indonesia (TMDI) to become the first-choice finance company for TMDI dealers in Indonesia. Under the agreement, GL staff will be physically located in TMDI showrooms to provide finance for TATA’s clients.
The TATA agreement should provide additional momentum for growth in Indonesia on top of the “channeling services” that GLFI undertakes for its strategic partner J-Trust Asia (JTA) in the financing of motorcycle, asset-backed loans, agricultural machinery, and micro-finance loans
According to research on GL recently published by brokerage firm DBS Vickers Securities, GL’s Myanmar businesses will be second in size only to Indonesia in the long run. “Myanmar’s motorcycle market is large (three times that of Cambodia) while the people’s exposure to the finance market is very low,” the paper stated.
Like GLF in Cambodia, GL-AMMK, GL’s joint venture with one of Myanmar’s leading beverage distributors, also has an exclusive agreement to finance Honda motorcycles in Myanmar. Honda’s market share in Myanmar currently is very low, only 10% (compared to 95% in Cambodia), which means there is huge room for growth as Honda’s market shares increases as expected.
Aside from hire-purchase loans, DBS Vickers said there is also huge potential in SME loans (inventory financing) given the extensive network of about 22,000 agents/grocery shops of the AMMK group.
“Things (in Myanmar and Indonesia) might have been a bit slow at the start. But now that our operating systems and other infrastructures have been set up, we will be expanding by leaps and bounds from now on,” Mr. Konoshita stated.
He added that Indonesia will be the largest market for GL over the next five years. The company has now penetrated into many rural areas on all the main islands where there are virtually no competitors. The GL chairman has estimated that the Indonesian operations will expand strongly to be worth “several billion” US dollars.
BGMM Receives Permission to take Deposits, Allowing for Local & Low-Cost Funds
06 Sep 2017
Group Lease Public Company Limited (“the Company”) would like to announce BGMM received permission to take deposits in Myanmar as follows:
BG Microfinance Myanmar Company Limited (“BGMM”), GL’s microfinance subsidiary in Myanmar, has received permission from the Myanmar government authorities to take voluntary deposits from individuals after having three years of continued operations and at least two years of continued profitability. BGMM is the first GL subsidiary to have obtained permission to take deposits. This will give BGMM another source of funds that is both low-cost and in the local currency, the Myanmar Kyat, reducing the need for funding from GL. As BGMM continues to grow, the BGMM will take advantage of this new offering to attract more customers and strengthen its ability to increase income while also reducing the exchange risk of the Company.
BGMM has already seen strong growth since it was acquired by GL. BGMM more than tripled the amount of loans being disbursed each month in only four months from MMK 311 million in February 2017 to MMK 1,134 million in June 2017. That has driven BGMM’s total loan portfolio to more than double from MMK 1,890 million to MMK 3,876 million during that time, in large part due to BGMM’s ability to attract new customers from only 10,479 in February 2017 to 21,101 by June 2017. At BGMM and GL, we look forward to continuing to grow and helping the Myanmar people.
Pre-payment by GL's Cyprus Borrowers
28 Aug 2017
As part of its effort to improve credit risk management, SET-listed digital finance firm Group Lease Public Company Limited (GL) has secured the pre-payment of loan principals and accrued interests totaling US$13.6 million or 453.2 million baht from its Cyprus borrowers.
In an official filing with the Stock Exchange of Thailand (SET) today (August 28), GL said the pre-payment comprised of three loan agreements with Cyprus-based Adalene Limited with total principals amounting to US$13.13 million (436.9 million baht) plus accrued interests of US$489,158 (16.3 million baht). The pre-payment was made with GL Holdings (GLH), GL’s wholly-owned subsidiary in Singapore.
As a result of the pre-payment, a pledge of 11.5 million GL shares made with GLH has been released.
Following the pre-payment, the remaining outstanding principals of the Cyprus borrowers now amounted to US$16.5 million or 547.5 million baht plus accrued interests of US$326,202 or 10.8 million baht. The Cyprus borrowers included Adalene Limited and AREF Holdings Limited.
According to Mr. Tatsuya Konoshita, chairman of GL’s executive committee, the pre-payment of the Cyprus loans was made in the best interest of GL since the principals were paid earlier but the pre-payment included all interests until September 30.
“GL is currently expanding into the high-potential Myanmar market with higher interest rates of more than 40% as compared to the average 15% from the (Cyprus) borrowers. We have already begun to shift the new funds to support our business expansion in Myanmar,” Mr. Konoshita stated.
For the remaining outstanding Cyprus loans of US$16.5 million, GL now has secured collateral value of US$23.7 million or a collateral coverage ratio of 144%.
Meanwhile, GL’s remaining outstanding loans to another group of SME borrowers in Singapore amounting to US$39.6 million are covered by collateral value of US$48.8 million or representing a coverage ratio of 123%
Mr. Konoshita noted that there are now no longer any GL shares in the collaterals from both the Cyprus and Singapore borrowers. He added that these loans have been secure, with no overdue from the beginning until now.
“The (Cyprus and Singapore) borrowers have enough ability to pay as GL has stated in the past,” he added.