Thai firm banks on Cambodia

[geovalin]

Charles Rollet

Group Lease, a Thailand-based motorcycle leasing firm, has credited its recent economic turnaround partly to “aggressive expansion” in Cambodia, and expects profits from the Kingdom to eventually take over those in Thailand.

“The Cambodian market offers high profit margins against very low provisions for non-performing loans,” GL’s CEO Mitsuji Konoshita said in a press release.

“And because we are starting from a small base, the market there carries enormous growth potentials.”

As earnings suffered due to Thailand’s politically-connected economic turmoil in the first half of 2014, GL says it has its Cambodian branch GL Finance and Thailand’s recent economic recovery to thank for high profits.

Of the last 93.76 million baht ($2,877,600) net profit in 2014’s fourth quarter, the company said 22 per cent – or 21.09 million baht ($647,461) – came largely from GL Finance.

GL Finance has now set up 153 points of sales across Cambodia to provide loans for Honda motorcycles and farming machinery.

About 2,000 vehicles are sold under GL Finance leases in Cambodia per month, according to the company, with sales slated to increase to 3,000 in March and 5,000 by the end of 2015.

That sets the Cambodian operation close to GL’s home base of Thailand, which deals about five to 6,000 bikes a month.

With profit margins substantially higher in Cambodia and a less crowded market than Thailand, GL says that “aggregate profits” from Cambodia are projected to surpass Thailand next year.

Nevertheless, most Cambodians still prefer to buy motos outright or purchase them by borrowing from friends or family.

A representative for Honda Mean Leap, a moto dealer in Phnom Penh which has a contract with GL Finance, said that most Cambodians “are still buying [motos] with their own money”.

“We only sell 10 to 15 motos on loan per month, but [it is becoming] more popular with Cambodians.”

Sin Senacheert, CEO of microfinance institution Prasac, said Cambodians who bought motorcycles on loan were mostly in urban areas.

While Prasac does provide motorcycle loans, Senacheert said they were not intended simply for personal use.

“We would not like to increase loans in that segment because it’s not for a productive purpose,” he said.

http://www.phnompenhpost.com/thai-firm-banks-cambodia