Japanese conglomerate Aeon is likely to expand its business into five countries in Southeast Asia including Thailand if those countries provide a high growth rate in the next few years.
That is especially the case for Cambodia, Laos and Myanmar.
The Aeon Group has assigned Aeon Thana Sinsap (Thailand) to oversee microfinance and leasing businesses in Cambodia, Myanmar and Laos through the latter’s wholly owned subsidiaries.
Aeon Thana Sinsap holds a 20-per-cent stake in Aeon’s leasing business in Vietnam.
Yasuhiko Kondo, managing director of Aeon Thana Sinsap, said yesterday that Aeon in Japan was looking at increasing its investment in the region once the new markets showed good prospects.
Kondo said the company’s wholly owned subsidiaries in Cambodia and a subsidiary in Vietnam generated 5 per cent of Aeon Thana Sinsap’s profits, which the company hoped would double to 10 per cent within three to five years as Laos and Myanmar gradually generated a profit.
He said a microfinance company in Cambodia, which opened almost three years ago, generated a net profit of Bt10 million to Bt15 million last year.
Aeon in Cambodia has two branches with a customer base of 15,000 but plans to open more. Kondo said Aeon Thana Sinsap hoped that its consumer-finance net profit in Cambodia would be accelerated when Aeon opens in a shopping mall in that country midyear.
Aeon Cambodia provides leasing for motorcycles, home appliances and mobile phones. Kondo said Cambodia was a high-growth market.
But he said two subsidiaries in Myanmar and Laos that opened last year were not generating a profit yet but the company hoped that in the next two or three years both markets would start contributing.
In Vietnam last year, the company reported consumer-finance net profit of Bt50 million to Bt60 million, while Aeon Thana Sinsap’s 2013 net profit as at the end of November was Bt1.89 billion.
Its full-year financial results will be announced next month.
Kondo said Aeon Thana Sinsap provided capital to the firms in Cambodia, Myanmar and Laos, and once the companies started generating a profit the other firms would seek to fund themselves, including through bond issues.
Kondo said Aeon Thana Sinsap had no plan to increase its capital from the current level of Bt250 million, although the company had several sources of funds to strengthen its business in Thailand.
Every year, the company issued bonds to roll over the previous bonds, with around 70 per cent long-term bonds with tenors of three to five years while around 30 per cent are short-term bonds.
It plans to issue debentures in the second half of this year.
Kondo said Aeon Thana Sinsap collected a monthly debt of Bt5 billion to Bt6 billion and provided a monthly debt of Bt7 billion to Bt8 billion, with the good collection ratio helping cash flow.
The company this year projects loan growth of 10 per cent from outstanding loans of Bt50 billion.
Kondo said the Constitutional Court’s decision yesterday to nullify the general election might have an impact on consumer spending, and the company would monitor the situation before reviewing its business plan again.