Aira Capital eyes consolidated net profit

Aira Capital last year reported a consolidated net loss of Bt98.96 million, which was followed by a consolidated net loss of Bt22.18 million in the first quarter of this year
Nalinee Ngamsettamas, chairman of the executive committee and chief executive officer, said that taking the balance sheet of Aira Capital alone, the company had made a net profit.
However, it had to provide funding support to subsidiaries and, until they could stand by themselves, these units would not be in the black until the end of 2018.
In 2019, the holding company will enjoy a consolidated net profit and a healthy dividend from investment in its subsidiaries, she said.
The company, which is listed on the Market for Alternative Investment (MAI), has eight subsidiaries, of which six are financial businesses, representing 75 per cent of overall revenue.
 Aira & Aiful (A&A), a consumer-finance provider, which Aira Capital formed as a joint venture with Japan-based Aiful Corp, is the flagship business of the holding company, the CEO said.
 Aira Capital plans to push for A&A to list on the MAI in the fourth quarter of next year or the first quarter of 2018, as such a move would bring liquidity to the joint-venture unit, she added.
“A&A today has to rely on our funding and its balance sheet is still in the red. Because of the nature of consumer finance, it needs huge funds to support its lending. However, the growth of consumer finance is V-shaped and the balance sheet will gradually turn positive.
“A&A must eventually stand by itself and the listing will not only help A&A raise funds from its initial public offering, as it will also be able to issue debentures if more funds are required to expand the business,” Nalinee explained.
A&A kicked off as a consumer-finance operator under the A Money brand on December 5 last year, and now has a loan portfolio of Bt700 million from around 40,000 customers.
Its performance to date is 20 per cent better than expected, while the non-performing loan (NPL) rate of 2-3 per cent is acceptable, she said.
Consumer finance in Thailand has room for significant growth because it is the key market for replacing the usurious operations of loan sharks, she added.
Aira Capital will be happy if A&A can maintain its NPL ratio in line with the market, the chief executive said.
A&A’s customer base this year should reach 100,000, or perhaps even as high as 150,000.
A&A has also received a nano-finance licence, which will be run in parallel with its consumer-finance operations.
Nalinee said nano-finance providers were highly cautious about lending to this segment.
 A&A has to find the right balance because, even though Aiful possesses nano-finance expertise in Japan, the repayment disciplines of Thai and Japanese consumers are somewhat different, she suggested.
However, Aiful is paying close attention to nano-finance in Thailand as it wants to be the leading player in this category, she added.
Meanwhile, Aira Capital will help its subsidiary to expand its customer base by contacting MAI-listed companies, which are mostly manufacturers, so that they can inform their employees about A Money.
 “Listed companies in the MAI have told us of the problems faced by their factory employees, many of whom have to borrow from loan sharks. We can be the financial solution for workers at such businesses.
“[Serving the needs of] employees at those factories will be good practice for A Money staff because, if they can look after this segment well, there will be more confidence in providing A Money loans to consumers upcountry,” she said.
Aira Capital will also push its newest subsidiary, Aira Leasing – formerly known as Rent-A-V, which it took over from Krungthai Tractor – to list on the MAI in 2018.
Aira Capital holds an 80-per-cent stake in Aira Leasing, with the remainder held by the family that founded Krungthai Tractor.
The new unit is attractive due to its hidden value of quality customers, which are mostly big-name companies, and its quality technicians who have expertise in the maintenance of machines and industrial equipment, Nalinee said.
 Although Rent-A-V has witnessed a cash-flow shortage, Aira Capital sees value in the company, which could strengthen the financial-business side of the holding company, she added.
“MAI-listed manufacturers are the target for Aira Leasing, and we will contact those firms with a view to them taking up operating leases with our leasing arm. Aira Leasing also plans to offer auto hire purchase, with the employees of these listed companies among the main targets,” she explained.
By 2018, Aira Leasing should have a loan portfolio of Bt5 billion, against Bt1 billion currently, she predicted.
As to the holding company’s non-financial arms, it also plans to bring Industrial Cleaning Services to list on the stock market, she said.