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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.