VGI deepens regional push with tie-up

MACO is the second-largest operator of out-of-home advertising media, controlling a market share of between 30 per cent and 35 per cent.
Kavin Kanjanapas, chairman of executive committee, VGI Global Media Plc, said the partnership will be a new milestone as VGI and MACO expand the group’s business coverage in Southeast Asia. The incorporation of the joint venture is expected to be completed within February next year.
The joint venture will have US$5 million (Bt164 million) in initial capital, of which 40 per cent will be owned by VGI Maco (Singapore) Private Ltd, and 60 per cent by Sinar Mas Group.
VGI Maco (Singapore) is a Singapore-registered joint venture between VGI and MACO, with the stake split 25 per cent to 75 per cent respectively. The company aims to explore future business opportunities in Southeast Asia.
Sinar Mas Group is one of the largest conglomerates in Indonesia. It covers diverse industries, including pulp and paper, palm oil, property development, insurance, power generation and telecom.
“Basically, VGI will replicate our model including out-of-home, payment and customer relationship management (CRM) loyalty programme in Thailand through the joint venture to the Indonesia market,” said Kavin.
“Advertising spending in the Indonesia market is around three to four times bigger than in Thailand. Hence, we see the opportunity to tap into the Indonesia market,” he said.
“The JV is in line with our business model, as we have a strategy to expanding business across Southeast Asia region by replicating our Thailand business model to the overseas market,” added Kavin.
The VGI business is no longer focusing on the advertising sector in particular, he noted.
“Overall advertising is expected to increase by 10 per cent driven by out-of-home and online sectors, which are forecasted to grow by 10 per cent and 35 per cent respectively. A macroeconomic upswing and positive sentiment from the [Thailand] election would be the key driver,” said Kavin.
“The growth of e-commerce is expected to increase by 30 per cent annually, driven by the ever-changing lifestyle of consumers that is tied to mobile and smart devices. Thus, it benefits our payment and logistics business as well,” he added.
Kavin said that VGI’s performance is projected to be positive next year as out-of-home media creates a direct impact, and awareness of the general election stimulates advertising spending in the sector. 
Nevertheless, the political parties are regulated not to spend more than Bt1.5 million each for advertising.
He said that VGI expected its total revenue to reach Bt10 billion, with Bt2 billion in net profit by 2021.
“For this year, we revised our full-year target up from between Bt4.4 billion and Bt4.6 billion in total revenue to about Bt5 billion, with a net profit margin at between 20 per cent and 25 per cent,” said Kavin, adding that its fiscal year’s fourth quarter will end at March 31 of next year.