The world is moving farther away from owning things and closer towards merely using them as services like Airbnb and Uber grow. But the halfway point between owning things and the temporary hire of purchase is still the most attractive option to many.
With a large potential market in Thailand and the rest of the ASEAN region, Group Lease has attracted consumers who cannot afford to pay for large purchases but would still like to own property.
Despite the government’s tax rebate programs for first car purchases, most Thais are still unable to afford, what is to them, a luxury purchase. Instead, they are left to opt for cheaper means of transportation – typically motorbikes. Even when buying a motorcycle, data shows that the majority of purchases made are hire purchase. Thailand’s hire purchase industry for motorbikes is huge on its own.
In fact, the industry is so large that one fourth of Thailand’s ever rising household debt, which was last recorded to be at 80% of the country’s GDP, is made up of auto loans. Not only is the industry big, it is also rapidly growing. According to a report by CIMB, one of the top international banks in Thailand, the sector is expected to grow annually at a CAGR of 4.2%.
This does not come as a shock considering the fact that hire purchase transactions account for about 60% of the total motorbike sales in Bangkok and 80% in other parts. And the growth does not only apply to Thailand, but also its neighboring countries. Many of the leading Thai financial institutions are expanding their business across borders.
Group Lease: ASEAN’s Best Hire-Purchase Investment
The fastest growing motorcycle financing company in the world, Group Lease (BKK:GL) has been aggressively expanding its business to neighboring countries to capture even more consumers According to the executive board chairman, the major profit contributors this year are from Indonesia and Laos. The company also has operations in Cambodia and Vietnam, underscoring its focus on consumers in the ASEAN region. Offering after sales services along with its financing, Group Lease has set an ambitious goal of increasing its net profit tenfold in the next 5 years.
There are two main reasons to invest in Group Lease. First of all, it is growing at a sustainable yet rapid rate. Its sales grew by nearly 20% yet the company still managed to raise its net profit margin by 50%, which is an impressive feat. Second, it has sound fundamentals. With a current ratio of over 3, it shows no signs of difficulty in repaying its debt. It also has one of the industry’s best ROI.
Selling at 29.75 Thai Baht with a P/E ratio of 65 to reflect its rapid expansion, Group Lease is an investment to consider if you want to invest in Asia.