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TK in hunt for acquisitions

Mar 07. 2017
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HIRE-PURCHASE service provider Thitikorn (TK) is aiming for a 5 per cent boost to its loan portfolio this year while keeping an eye out for acquisitions and other investments at home and abroad.

Prathama Phornprapha, TK managing director, said that positive factors for the projected loan growth include expectations for an increase in Thai exports and for higher sales of cars and motorcycles.

The company also believes its cash balance of Bt3 billion to Bt4 billion puts it in good stead for investments.

Thailand this year is expected to see sales of 1.75 million motorcycles and 800,000 cars. Some 1.73 million motorcycles and 768,000 cars were sold last year. 

However, TK’s loan growth target for 2017 is below last year's loan growth of 6.5 per cent, factoring in the dry weather that could affect farm incomes, the country’s high household debt and uncertainties over the United States’ US trade policies.

TK's loan portfolio amounted to Bt7.72 billion in 2016. If the 5 per cent growth target is met this year, the portfolio will reach Bt8.11 billion.

“In the past two months, the momentum remained favourable and it is expected that this tone will continue,” Prathama said.

“Our growth estimate is conservative. If it all comes in as expected, the loan growth may expand higher than expected. These are from acquisitions, joint investment or branch openings overseas.”

TK expects to limit its non-performing loans (NPL) to no more than 4.5 per cent this year of the total, based on a conservative target for loan growth. At the end of last year, the company’s NPLs were in the 4.8-4.9 per cent range. 

The company will open four more branches in Thailand this year, with investment of Bt3 million per branch. It will also add more three branches in Cambodia.

 At the end of last year, TK had 88 local branches, three in Cambodia and one outlet in Laos. 

TK is looking into opening more branches in Laos, where the authorities impose strict regulations.

The company also plan to open branches in at least one more country in the so-called CLMV group - Cambodia, Laos, Myanmar and Vietnam – to boost overseas loan contributions to 5 per cent of total loans this year. Last year's overseas branch contribution accounted for 2 per cent 

The company targets having half of total loans from overseas by 2020. The opening of more branches in neighbouring countries is in line with this goal.

TK is seeking opportunities for acquisitions and joint investment in Thailand and overseas, particularly in the CLMV group.

If the US Federal Reserve raises its benchmark interest rates three times this year, which could boost borrowing costs and lessen liquidity, companies may be sold off and that could open opportunities for TK to acquire businesses at reasonable prices.

With its cash in hand of Bt3 billion to Bt4 billion, it has a credit line from banks for the same amount. It says this is sufficient for acquisitions or joint investments. TK’s debt to equity ratio is 0.9 time.


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