How has MTLS successfully expanded throughout the country?
We listed on the Stock Exchange of Thailand in 2014, and grew 50% and 80% in 2015 and 2016 respectively. This year our target was to grow by 50% and in the first nine months of the year we have already grown by 55% thus we are expecting to be able to achieve this growth target. For the next two years we aim to grow by 40% per year and by 30% in 2020. The figures that we have achieved since being listed are across the board in terms of new loan growth, account receivable growth and profit growth. All whilst maintain our Non-Performing Loans ratio (NPL's) at 1.5%. We were able to achieve this because with the funds raised from IPO (Initial Public Offering), we expanded from 506 branches in 2014 predominately in Central and Northern Thailand to 2,294 branches today via branch expansion in Bangkok, Eastern and Southern Thailand.
What type of loans does MTLS offer to its customers?
Our customers are farmers, constructions workers, company workers, small business owners and civil servants and we offer five core products, 1) secured loans for motorcycles, 2) secured loans for automotives which includes both personal vehicles and tractors, 3) Secured loans for land, 4) unsecured loans for personal loans and; 5) nano financing. Currently, our 39% of the loan receivables is from motorcycles, 33% from cars, 14% from land, and the remaining from personal loans, tractors, and nano financing and we aim to maintain this ratio for the next few years. Today we have a total of 1.3 million customers from 1.6 million contracts.
How is MTLS able to manage its growth and NPL’s so effectively?
Focus and great team work. As founders, we have been focused purely on this business for the past 25 years and understand the ins and outs of the business, the industry, our customers, our competitors and how to ensure that our company can succeed. And it is the team work that allows us to grow successfully and manage the NPL’s well. Our five core values are; 1) Work Honestly, 2) Work Hard, 3) Positive Attitude, 4) Teamwork, and 5) Discipline. It is ingrained within the structure of the organisation that each person is responsible for their own, their teams, and the company’s performance.
Given the issues in the bill of exchange market, is financing an issue for MTLS?
Financing has not been an issue for us, despite the events that occurred with a few publicly listed companies in Thailand, we enable to successfully issue Bill of Exchanges, bonds or receive loans from the commercial banks in Thailand. Currently our debt to equity ratio is at 3x and our commercial bank partners are satisfied and comfortable with us. Even with our current expansion plans we hope to be able to maintain this satisfactory in the next few years because we maintain our dividend policy below 50% allowing us to grow our equity base.
What differentiates MTLS from its competitors?
When one initially walks into one of our branches there is no tangible difference between us and our competitors. But once a customer experiences the full service of borrowing and repaying a loan then, they will find a difference. When we refer to our service, it may be something as simple as the service of providing a glass of cold water to a customer that walks into a branch which one does not find at other companies or financial institutions, or the fact that we offer the lowest rate of service fee at 8% and interest charge 15% annum. And it is the impression of the company that is important because after a customer is pleased with our services then through word of mouth we can continue growing our customer base. Also, when we talk about competition, it is not necessarily being the banks or other financial services companies. Our competitors, however, are the local players within each town, city, province. These typically are the gold shops, dealers, lawyers and so forth, because they do know the community, however, they do not necessarily treat their customers well and do charge very high rates of 3-5% per month. So, when MTLS expands into a new location, we bring professionalism, we focus on serving our customers and this separates us from our competitors.
Would MTLS consider expanding outside of Thailand or expanding into new products and services?
The CLMV region is an interesting option for us and we have visited the countries and met with potential partners but now is not the right time to expand given the current development each country’s infrastructure, banking systems, regulations and laws. With the upcoming elections and continued government spending of 2.2 trillion baht on the infrastructure projects throughout the country this provides us with visibility our customers will be gainfully employed. For new products or services, we have our experience in our five core products and will focus on what we know until the market potential is fulfilled. However with 1 million customers we do have the possibility introducing a new product whether it be hire-purchase or something else, but for now we will focus on our five core products and focus within Thailand.
What are the biggest risks facing your business?
In Thailand that are two risk factors to worry about, first are the natural disasters and second is political instability. With natural disasters we do have to monitor the periods of when there are floods or droughts throughout the country as these events may impact the livelihood of our customers and impact their ability to service the loans from MTLS. This year even though there were some floods thankfully have the experience to know how to deal with this and manage the situation well, also with the levels in the water dams at 50% we do not have to worry about a potential drought on the horizon. With regards to political instability, in the past there was instability with the riots and different political factions but since the military government there has been stability. Other than these two factors we look at potential disruptions such as the growing adoption of technology and we have been pro-active by developing our own systems that will allow customers to easily pay loans or borrow more via their phones in the future, until we can launch this system we have ensured that there are multiple avenues of repayment via our branches, 7-11’s and other modern retail trade channels.
Where do you expect to see MTLS in five years from now?
Today we are the largest in assets, new loans, account receivables and profitability. Our business plan for the next three years is to expand to 4,000 branches by opening 600 new branches per year and maintain the existing proportion of loans. With 4,000 branches, we will cover the entire country, widen the distance between MTLS and other competitors, and our number of branches will be equal to 50% of all the commercial bank branches in Thailand combined. Because of our experience, focus and teamwork we are confident in our ability to achieve this.