Thitikorn Plc (TK), the motorcycle hirepurchase lender, projects revenue growth of 16% this year as it expands upcountry and into new lending businesses.
TK reported first-half revenues of 1.33 billion baht, up from 1.22 billion in the same period last year. Net profit, however,fell to 143.57 million baht from 169.19 million. Second-quarter net profit dropped to 78.9 million baht from 88.66 million a year earlier.
Prapol Phornprapa, a TK deputy managing director, said that even though revenues rose, profits fell as the company continued to expand and invest in its branch network. The company plans to open two or three new branches over the next few months to increase its current network of 75 stores.
"We are also looking to expand into auto leasing as competition in Bangkok has fallen. We will also consider other new businesses, such as credit cards or electronic appliance hire-purchase loans for the future," he told investors at a briefing at the Stock Exchange of Thailand yesterday.
Nearly 70% of TK's revenues currently come from motorcycle leases. The company, which claims a 25% market share in Greater Bangkok, had outstanding loans of 5.7 billion baht at the end of June compared with 5.2 billion at the end of 2008.
Asset quality has remained relatively stable, with non-performing loans, defined as at least six months past-due, at 2.5% of total loans at the end of June.Doubtful debt, representing accounts past-due at least four months, were 4.5%of total loans.
Mr Prapol said the company had increased downpayment requirements to 20% of the purchase price compared with 5-10% in the past to help reduce credit risk.
In any case, profit declines were to be expected considering the decline in vehicle sales in the economic downturn.High competition in the industry would also affect profits, although TK has been able to maintain margin spreads at around 30%, with its cost of funds now at around 4% to 5%.
Mr Prapol said TK had also set up credit lines of 2.5 billion baht to purchase motorcycle or car lease assets if the pricing was reasonable.
TK shares closed yesterday on the Stock Exchange of Thailand at 3.44 baht,up four satang, in trade worth 79,000 baht.
Thursday, August 27, 2009
LOBBY WEAKENS US CAMPAIGN
Nearly 5 million of the worst-polluting vehicles in the US have been quietly excluded from the popular "Cash for Clunkers" progrkamme after lobbyists for antique auto-parts suppliers and car collectors persuaded the government to shut out cars built before 1984.
The restriction has prevented consumers who own older cars and pickups from cashing in on the US$3-billion (Bt102 billion) federal programme even though many do not consider their jalopies to be collectors' items.
When the federal government announced the rebates of up to $4,500, Chris Hurst said it looked like the perfect time to unload his gas-guzzling 1981 Ford F-150, California, was surprised to discover his pickup was too old to qualify.
"If we could have gotten that rebate, it would have worked perfectly for us," said Hurst, who is now trying to sell the vehicle, equipped with Ford's biggest V8 engine, for $1,600.
The restrictions were pushed by lobbyists fot the Specialty Equipment Market Association (Sema), a California group representing companies that sell parts and services to classic and antique car collectors. The group, as well as classic car enthusists, have oppesed "Cash for Clunker", because they do not want older vehicles to be destroyed.
When the proposals for the clunker buy-back programme surfaced early this year, Sema opposed the entire concept, because such a programme could shrink the size of the market for after-market parts. Sema eventually succeeded in getting lawmakers to adopt the aage restriction.
"We are very pleased that Congress was able to include that in the programme," said Stuart Gosswein, director of regulatory affairs at Sema.
The organisation represents more thna 7,000 comapnies that make all manner of auto-related products, including reproduction Model T tyres and AMC Gremlin upholstery. The powerful interest group earlier won legislative batteles to protect owners of classic cars and hot rods from laws covering vehicle noise and emissions tests, among other things.
Consumer kand environmental groups reluctantly went along with the Sema provision, because they were too busy fighting for any rule that would push consumers to buy more fuel-efficient vehicles than the ones they were using.
"I don't know that the programme makes a whole lot of environmental sense," said Lena Pons, a policy analyst for Public Citizen, which pushed for tougher fuel-economy standards.
"There is not a whole lot of justification for the classic-car industry to block older vehicles from being traded in."
Other critics fault the age limit on economic grounds, saying it makes little sense even for collectors.
"If I own a 30-year-old Mustang, the value of my car goes up if others get destroyed," said Chris Edwards, an economist for the libertarian Cato Institute.
"It is a typical industry loophole that doesn't protect the little guy but does protect some special-interest groups."
Many Americans do not have the money to buy a new car, said Dan Baker, a part-time handymand and gardener in South Carolina who said he wished he could have qualified for a rebate to upgrade to a better used vehicle.
"I'm the kind of person this programme could have helped," he said.
Baker is trying to sell a brown 1980 Oldsmobile Cutlass SS with a broken air-conditioner and rusty fenders for $1,200.
"It's just an old car with 101,000 miles on it," Baker said. "It is not a classic."
Groups representing salvajge yards and service garages also derailed a provision in the bill that would have required the entire drive train of traded-in clunkers to be destroyed. Junkyards are now permitted to strip and resell all parts of the vehicles, exept the engines.
The restriction has prevented consumers who own older cars and pickups from cashing in on the US$3-billion (Bt102 billion) federal programme even though many do not consider their jalopies to be collectors' items.
When the federal government announced the rebates of up to $4,500, Chris Hurst said it looked like the perfect time to unload his gas-guzzling 1981 Ford F-150, California, was surprised to discover his pickup was too old to qualify.
"If we could have gotten that rebate, it would have worked perfectly for us," said Hurst, who is now trying to sell the vehicle, equipped with Ford's biggest V8 engine, for $1,600.
The restrictions were pushed by lobbyists fot the Specialty Equipment Market Association (Sema), a California group representing companies that sell parts and services to classic and antique car collectors. The group, as well as classic car enthusists, have oppesed "Cash for Clunker", because they do not want older vehicles to be destroyed.
When the proposals for the clunker buy-back programme surfaced early this year, Sema opposed the entire concept, because such a programme could shrink the size of the market for after-market parts. Sema eventually succeeded in getting lawmakers to adopt the aage restriction.
"We are very pleased that Congress was able to include that in the programme," said Stuart Gosswein, director of regulatory affairs at Sema.
The organisation represents more thna 7,000 comapnies that make all manner of auto-related products, including reproduction Model T tyres and AMC Gremlin upholstery. The powerful interest group earlier won legislative batteles to protect owners of classic cars and hot rods from laws covering vehicle noise and emissions tests, among other things.
Consumer kand environmental groups reluctantly went along with the Sema provision, because they were too busy fighting for any rule that would push consumers to buy more fuel-efficient vehicles than the ones they were using.
"I don't know that the programme makes a whole lot of environmental sense," said Lena Pons, a policy analyst for Public Citizen, which pushed for tougher fuel-economy standards.
"There is not a whole lot of justification for the classic-car industry to block older vehicles from being traded in."
Other critics fault the age limit on economic grounds, saying it makes little sense even for collectors.
"If I own a 30-year-old Mustang, the value of my car goes up if others get destroyed," said Chris Edwards, an economist for the libertarian Cato Institute.
"It is a typical industry loophole that doesn't protect the little guy but does protect some special-interest groups."
Many Americans do not have the money to buy a new car, said Dan Baker, a part-time handymand and gardener in South Carolina who said he wished he could have qualified for a rebate to upgrade to a better used vehicle.
"I'm the kind of person this programme could have helped," he said.
Baker is trying to sell a brown 1980 Oldsmobile Cutlass SS with a broken air-conditioner and rusty fenders for $1,200.
"It's just an old car with 101,000 miles on it," Baker said. "It is not a classic."
Groups representing salvajge yards and service garages also derailed a provision in the bill that would have required the entire drive train of traded-in clunkers to be destroyed. Junkyards are now permitted to strip and resell all parts of the vehicles, exept the engines.
Loan terms will ease as economy improves
Better economic signs would make accessing credit easier for consumers as restrictions on loan approvals would ease, said Isara Wongrung, managing director of Kasikorn Leasing.
Financial institutions, including Kasikorn Leasing, would relax tight loan conditions if the economy starts improving,he said. However, the relief would not cover falling interest rates for auto hire purchase loans which are a result of the current strong competition.
The company charges an annual flat rate of 2.65% for a new car, while the bank's average margin is around 2%.
Improving economic signs partly led to a reduction in non-performing loans from 2.26% of total outstanding loans in June to 2.1% at the end of last month.The firm expected its distressed debts to be on target at 2% by the year-end.
Kasikornbank's leasing company hopes positive factors will support its loan growth target this year. It aimed to grow 2009 new loans to 30 billion baht after it booked loan growth of 17 billion for the first seven months. The company expects to boost total outstanding loans to 42 billion baht by the end of this year,with 38.5 billion made in the first half.
The company's loan expansion has been better, with outstanding loans rising to 39.1 billion baht in July and expected to hit 40 billion this month. Despite a projected drop in car sales this year, the sector should improve in the second half, he said.
Kasikorn Research Center forecast second-half car sales of 230,000-250,000 units, a slight improvement from the first half. For the first six months of the year,230,000 units were sold, a 28%year-on-year decline.
Financial institutions, including Kasikorn Leasing, would relax tight loan conditions if the economy starts improving,he said. However, the relief would not cover falling interest rates for auto hire purchase loans which are a result of the current strong competition.
The company charges an annual flat rate of 2.65% for a new car, while the bank's average margin is around 2%.
Improving economic signs partly led to a reduction in non-performing loans from 2.26% of total outstanding loans in June to 2.1% at the end of last month.The firm expected its distressed debts to be on target at 2% by the year-end.
Kasikornbank's leasing company hopes positive factors will support its loan growth target this year. It aimed to grow 2009 new loans to 30 billion baht after it booked loan growth of 17 billion for the first seven months. The company expects to boost total outstanding loans to 42 billion baht by the end of this year,with 38.5 billion made in the first half.
The company's loan expansion has been better, with outstanding loans rising to 39.1 billion baht in July and expected to hit 40 billion this month. Despite a projected drop in car sales this year, the sector should improve in the second half, he said.
Kasikorn Research Center forecast second-half car sales of 230,000-250,000 units, a slight improvement from the first half. For the first six months of the year,230,000 units were sold, a 28%year-on-year decline.
KTB Leasing posts 200% profit growth on higher margins
KTB Leasing showed net profit growth of 200% in the first half of the year,thanks to rising interest margins as a result of good funding cost management.
President Phinyavat Chantrakantanond said the company posted a net profit of 95 million baht for the first half, compared to 30 million in the same period last year, a growth rate of 216%.
The Krung Thai Bank affiliate projects 2009 net profits of around 200 million baht, higher than the existing target of 150 million. Last year, net profit was 50 million.
He said profit gains were partly supported by higher interest income due to efficient cost management. The company's net interest margin in the second quarter was around 7%, an increase from 5.2% at the end of last year. The company expects to maintain the high margin throughout this year.
Funding for the leasing firm is supported by Krung Thai Bank.
The average interest rate KTB Leasing charges is around 10% per year. Hirepurchase loans for consumer goods are 20% its portfolio, lower than the industry average of 24-26%. Consumer and auto loans represent 60% of total outstanding loans at 13 billion baht.
The leasing firm aims to expand outstanding loans to 15 billion baht by the end of the year, despite lower-thantargeted loan growth for the first half of the year. KTB Leasing had new loans of 2 billion baht for the first six months and has a full-year target of 7 billion.Dwindling loan demand and the company's tightening of loan approvals were key factors.
"Hopefully, we will meet our loan growth target for this year if the country's economy keeps improving. Loan growth from June has been better, while the company has controlled distressed debts at a satisfactory level," he said.
Non-performing loans were 2.6% of total outstanding loans, and that number should fall to 2% by the end of the year.
President Phinyavat Chantrakantanond said the company posted a net profit of 95 million baht for the first half, compared to 30 million in the same period last year, a growth rate of 216%.
The Krung Thai Bank affiliate projects 2009 net profits of around 200 million baht, higher than the existing target of 150 million. Last year, net profit was 50 million.
He said profit gains were partly supported by higher interest income due to efficient cost management. The company's net interest margin in the second quarter was around 7%, an increase from 5.2% at the end of last year. The company expects to maintain the high margin throughout this year.
Funding for the leasing firm is supported by Krung Thai Bank.
The average interest rate KTB Leasing charges is around 10% per year. Hirepurchase loans for consumer goods are 20% its portfolio, lower than the industry average of 24-26%. Consumer and auto loans represent 60% of total outstanding loans at 13 billion baht.
The leasing firm aims to expand outstanding loans to 15 billion baht by the end of the year, despite lower-thantargeted loan growth for the first half of the year. KTB Leasing had new loans of 2 billion baht for the first six months and has a full-year target of 7 billion.Dwindling loan demand and the company's tightening of loan approvals were key factors.
"Hopefully, we will meet our loan growth target for this year if the country's economy keeps improving. Loan growth from June has been better, while the company has controlled distressed debts at a satisfactory level," he said.
Non-performing loans were 2.6% of total outstanding loans, and that number should fall to 2% by the end of the year.
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