Bike hire-purchase lender eyes debt-collection

Thitikorn, a leading motorcycle hire-purchase lender, plans to expand its business to debt collection in a bid to boost revenue above its target of 10 per cent next year.

Deputy managing director Prapol Phornprapha said yesterday that several financial institutions and banks had decided to stop their debt collection operations and are opening for bidding the debt-collection business.

He said the company expected the total value of the debt-collection market to be about Bt30 billion.

He said Thitikorn was interested in taking over those transactions or subcontracting from the winners of the bidding. The company has the potential to borrow Bt10 billion if it wants to take over the debt-collection business. The loan amount will take the company's debt to equity ratio to not over 5: 1, which is the affordable rate for it.

He said many financial institutions and banks viewed debt collection as an unworthy business in this economic climate. But the company can take advantage of this business as it will not have any additional cost. Its existing employees could run the business immediately.

"If we can add this new business to our operation next year, the revenue should be higher than the current target of 10 per cent," he said.

Prapol said the company's revenue target for next year was set on the assumption that the economic gloom will not last more than a year. The key factors to affect its performance next year are the country's gross domestic product (GDP), agricultural prices and the closure of factories.

"The economic growth figure is the indicator of the automobile hire-purchase market. About 69 per cent of our revenue in the first nine months of this year came from motorcycle hire purchase and the largest customer base is farmers in the provinces. Some of our customers are also factory workers. Thus, if some factories are shut down and our customers are laid off, it will affect us," he said.

In the first nine months of this year, Thitikorn posted net profit of Bt258.25 million, increasing by 19.11 per cent from Bt216.81 million in the same period last year.

Meanwhile, its revenue in that period rose by 7 per cent. The company expects its revenue this year to grow by 10 per cent. The last quarter is usually the high season for automobile hire-purchase business.