Symbol : ASK
Last Done : 23.60 BAHT
Change :  +0.10 0.43%
Volume (Shares) :      231,000
Prior
23.50
Open
23.60
52 Weeks' Low
21.20
52 Weeks' High
26.25
Updated: 19 Sep 2018 16:36
Refresh for Real-time Quote
Investor Relations > Financial Information > Management Discussion and Analysis (MD & A)
   

Overview of the Historical Financial Position and Operating Performance

As of December 31, 2017, the Company and its subsidiaries recorded the total assets of THB 33,999.19 million increased from THB 31,706.54 million at the end of year 2016 or increased by 7.23 percent due to the portfolio growth. The disbursement in 2017 was 19,371.87 THB million decreased by 3.58 percent from that of THB 20,090.72 million in 2016.

The total liabilities as of December 31, 2017 were THB 29,168.28 million increased by 7.52 percent from THB 27,128.20 million at the end of 2016.

The shareholders’ equity as of December 31, 2017 was THB 4,830.91 million, increased by 5.52 percent from THB 4,578.34 million at the end of 2016. This was resulted from a good operating performance that reflected on a rise in the Company’s retain earnings. The Company had registered capital of THB 1,759.48 million and retained earnings of THB 2,351.82 million.

Total revenues in 2017 amounted to THB 2,933.36 million increased by 4.17 from THB 2,815.93 million in 2016 as a result of a growth in portfolio. The major sources of revenues were from hire purchase interest income, which was accounted for 82.34 percent and 81.89 percent of total revenues in 2017 and 2016 respectively. Income from factoring was 1.73 percent and 3.15 percent of total revenues in 2017 and 2016 respectively. The interest income from financial lease (leasing business) generated 1.58 percent and 2.31 percent of total revenues in 2017 and 2016 respectively. The other incomes including interest income from loans, penalty income, income from recommending insurance services, were 14.35 percent and 12.65of total revenues in 2017 and 2016 respectively.

The total expenses (including bad debt and doubtful accounts, financial cost, and corporate income tax expense) amounted to THB 2,188.31 million in 2017 increased by 3.75 percent from THB 2,109.24 million in 2016. The selling and administrative expenses were 35.53 percent and 34.98 percent of total expenses in 2017 and 2016 respectively. The bad debt and doubtful accounts were 21.19 percent and 18.00 percent of total expenses in 2017 and 2016 respectively. The financial costs were 35.28 percent and 39.38 percent of total expenses in 2017 and 2016 respectively. The corporate income tax expense was 8.01 percent and 7.64 percent of total expenses in 2017 and 2016 respectively.

The selling and administrative expenses amounted to THB 777.41 million in 2017 increased by 5.38 percent from THB 737.72 million in 2016. The financial costsin 2017 amounted to THB 771.95 million decreased by 7.06 percent from THB 830.63 million in 2016. This was resulted from a decrease in the interest rate whereas the borrowings amount increased to support the portfolio expansion.

The total profit for the year 2017 amounted to THB 745.04 million increased by 5.43 percent from THB 706.68 million in 2016. The net profit margin ratio in 2017 was 25.40 percent slightly increased from 25.10 percent in 2016. The return on equity ratio in 2017 was 16.19 percent which was about that of 16.16 percent at the end of 2016.

The total portfolio before allowance for doubtful accounts in 2017 amounted to THB 33,724.42 million, increased from THB 31,671.29 million in 2016 or increased by 6.48 percent. The NPLs ratio at the end of 2017 was at 2.51 percent of the total portfolio, increased from 1.96 percent at the end of 2016. However, this still reflected the well-controlled asset quality of the Company and BGPL. The allowance for doubtful accounts to NPLs ratio was 99.00 percent at the end of 2017, decreased from 109.47 percent at the end of 2016.

Operating Performance by Business

Revenues

The total revenues of the Company and its subsidiaries during 2015 - 2017 equaled to THB 2,722.11 million THB 2,815.93 million and THB 2,933.36 millionrespectively. The major source of revenues was an income from hire-purchase business. Other sources were income from factoring, income from financial lease, and other incomes such as interest income from loans, penalty income, income from recommending insurance services etc., described as follows:

Hire-Purchase Interest Income

Hire-purchase interest income during 2015 -2017 amounted to THB 2,218.63 million, THB 2,305.92 million and THB 2,415.40 million respectively. Income in 2016 increased by 3.93 percent from 2015, income in 2017 increased by 4.75 percent from 2016 due to the expansion in the hire purchase portfolio. The hire-purchase account receivables before allowance for doubtful accounts (excluding court case receivables) at the end of the year 2015 - 2017 equaled to THB 27,932.84 million, THB 29,734.63 million and THB 32,044.34 million respectively. The hire-purchase interest income accounted for 81.50 percent, 81.89 percent and 82.34 percent of the total revenues of the Company and its subsidiaries during the year 2015 - 2017 respectively.

Factoring Income

Factoring income from BGPL’s business during 2015 - 2017 amounted to THB 109.66 million, THB 88.74 million and THB 50.62 million respectively. Income in 2016 decreased by 19.08 percent from 2015 and income in 2017 decreased by 42.96 percent from those of 2016. The decreases in factoring income were resulted from a drop in factoring portfolio due to the stringent credit policy of BGPL. The factoring receivables before allowance for doubtful accounts (excluding court case receivables) at end of the year 2015 - 2017 equaled to THB 1,072.43 million, THB 790.90 million and THB 487.93 million respectively. Factoring income accounted for 4.03 percent, 3.15 percent and 1.73 percent of the total revenues of the Company and its subsidiaries respectively.

Interest Income from Financial Leases

Interest income from financial leases from BGPL’s business during 2015 - 2017 amounted to THB 78.77 million, THB 65.00 million and THB 46.37 million respectively. Income in 2016 decreased by 17.48 percent from 2015 and income in 2017 decreased by 28.55 percent from those of 2016. The decreases were mainly from a decrease in financial lease portfolio. The financial lease receivables before allowance for doubtful accounts (excluding court case receivables) at the end of the year 2015 - 2017 equaled to THB 842.03 million, THB 709.37 million and THB 511.26 million respectively. Interest income from financial leases accounted for 2.89 percent, 2.31 percent and 1.58 percent of the total revenues of the Company and its subsidiaries respectively.

Other Incomes

Other incomes included interest income from loans, penalty income, income from recommending insurance services, etc. Other income from the Company and its subsidiaries during 2015 - 2017 amounted to THB 315.04 million, THB 356.27 million and THB 420.97 million respectively. Other income in 2016 increased by 13.09 percent from 2015 and other income in 2017 increased by 18.16 percent from 2016. Such increases were mainly attributable to an increase in income from recommending insurance services as a result of the new disbursement. The income from recommending insurance services at the end of the year 2015 - 2017 equaled to THB 167.45 million, THB 168.46 million and THB 190.23 million respectively, or increased by 0.60 percent in 2016 and 12.92 percent in 2017 respectively. The increase of income from recommending insurance was a result of the expansion of truck hire purchase portfolio and the establishment of SK Insurance Broker co., Ltd to operate in insurance broker business.

Expenses

The Company and its subsidiaries’ expenses (including bad debts and doubtful accounts, finance cost and income tax expenses) during 2015 - 2017 amounted to THB 2,041.49 million, THB 2,109.24 million and THB 2,188.31 million respectively. The expenses in 2016 increased by 3.32 percent from 2015 and those of in 2017 increased by 3.75 percent from 2016. The major source of expenses was selling and administrative expenses whereas the other sources of expenses included, finance cost, bad debt and doubtful accounts expenses, and income tax expenses, described as below:

Selling and administrative expenses

Selling and administrative expenses of the Company and its subsidiaries during 2015 - 2017 amounted to THB 694.40 million, THB 737.72 million and THB 777.41 million respectively. The said expenses in 2016 increased by 6.24 percent from 2015 and those of in 2017 increased by 5.38 percent from 2016. Selling and administrative expenses accounted for 34.01 percent, 34.98 percent and 35.53 percent of the total expenses of the Company and its subsidiaries during 2015 - 2017 respectively. The selling and administrative expenses mainly comprised of employee salary, bonus and related expenses.

Bad debts and doubtful accounts expenses

Bad debts and doubtful accounts expenses of the Company and BGPL during 2015 - 2017 amounted to THB 270.01 million, THB 379.79 and THB 463.78 million respectively. The said expenses in 2016 increased by 40.66 percent from 2015 and those of in 2017 increased by 22.11 percent from 2016. The increases in bad debts and doubtful accounts expenses in 2016 was mainly due to Thailand's economic slowdown even though the economic trend in 2017 started to recover, its affect remained negative. The Company and BGPL’s NPL to total lending ratio during 2015 - 2017 were 1.70 percent, 1.96 percent and 2.51 respectively indicating asset quality was still well controlled. The bad debts and doubtful accounts expenses accounted for 13.23 percent, 18.00 percent and 21.19 percent of the total expenses during 2015 - 2017 respectively.

Financial Cost

Financial cost was the main cost of the Company’s business which consisted of interest expenses and guarantee fees. The financial cost of the Company and its subsidiaries during 2015 - 2017 amounted to THB 903.98 million, THB 830.63 million and THB 771.95 million respectively. Financial cost in 2016 decreased by 8.11 percent from 2015 and those of in 2017 decreased by 7.06 percent from 2016 due to a decrease in the interest expense rate while the borrowings amount had been increased. During the year 2015 - 2017, the financial cost accounted for 44.28 percent, 39.38 percent and 35.28 percent of the total expenses respectively.

Corporate Income Tax

Corporate income tax of the Company and its subsidiaries during 2015 - 2017 amounted THB 173.10 million, THB 161.10 million and THB 175.18 million respectively. The tax expenses in 2016 decreased by 6.93 percent from 2015 as a result of the tax benefit from BGPL business whereas tax expense in 2017 increased by 8.74 percent from 2016. During the year 2015 - 2017, the corporate income tax accounted for 8.48 percent, 7.64 percent and 8.01 percent of the total expenses respectively.

Total Comprehensive Income

Profits during the year 2015 - 2017 for the Company and its subsidiaries amounted to THB 680.61 million, THB 706.68 million and 745.04 million respectively. The profit in 2016 increased by 3.83 percent from 2015 and profit in 2017 increased by 5.43 percent from 2016. Net profit margin ratio during the year 2015 - 2017 equaled to 25.00 percent, 25.10 percent and 25.40 percent respectively. The earning per weighted average shares during the year 2015 - 2017 equaled to THB 1.93 per share, THB 2.01 per share and THB 2.12 per share respectively.

The Company and its subsidiaries were able to maintain the proper interest rate spread while there was a fierce competition in the market interest rate. In addition, the Company and its subsidiaries continuously pay attention on the risk management by maintaining the good credit quality and balancing of the portfolio between new and used vehicles. For hire-purchase business, the Company had focused on vehicles that generate high revenues with acceptable risk such as used cars and commercial vehicles, rather than private vehicles. For leasing and factoring businesses, BGPL had determined the minimum interest rate charged to customers keeping the proper range of interest rate while still competitive to others in the market. 

Financial Status Analysis

Assets

The total assets of the Company and its subsidiaries at the end of the year 2015 - 2017 amounted to THB 30,249.48 million, THB 31,706.54 million and THB 33,999.19 million respectively. Total assets in 2016 increased by 4.82 percent from end of 2015 and total assets in 2017 increased by 7.23 percent from end of 2016. The increase in total assets was mainly due to a growth of the number of the hire-purchase account receivables (net of allowance for doubtful accounts) which were the main assets of the Company and its subsidiaries which accounted for 90.95 percent, 92.03 percent and 92.20 percent of the total assets at the end of the year 2015 - 2017 respectively. The core assets of the Company and its subsidiaries were summarized as follows:

Hire-Purchase Receivables

The hire-purchase receivables (net of allowance for doubtful accounts) of the Company and BGPL at the end of the year 2015 - 2017 amounted to THB 27,510.87 million, THB 29,179.86 million and THB 31,347.37 million respectively. These receivables in 2016 increased by 6.07 percent from 2015 and those of in 2017 increased by 7.43 percent. Such increases in the hire-purchase receivables were mainly due to a growth of the hire-purchase portfolio of the Company and BGPL.

Financial Lease Receivables

The financial lease receivable (net of allowance for doubtful accounts) of BGPL at the end of the year 2015 - 2017 amounted to THB 815.83 million, THB 682.68 million and THB 471.55 million respectively. These receivables at the end of 2016 decreased by 16.32 percent from end of 2015 and those of at the end of 2017 decreased 30.93 percent from end of 2016. The decreases in the financial lease receivable were mainly due to the prepayment of a customer of BGPL. In addition, the customers have changed from financial lease to hire purchase.

Factoring Receivables

The factoring receivables (net of allowance for doubtful accounts) of BGPL at the end of the year 2015 - 2017 amounted to THB 1,029.30 million, THB 697.84 million and THB 395.54 million respectively. These receivables at the end of 2016 decreased by 32.20 percent from 2015 and those of at end of 2017 decreased by 43.32 percent from end of 2016. Such decreases in the factoring receivables were mainly due to the slow growth in BGPL’s factoring portfolio expansion and the stringent credit policy of BGPL.

Quality of Receivables of the Company and BGPL

The Company and BGPL had the internal customers’ status classification method to assess the quality of the receivables. This status classification method was used for internal assessment. In order to compare with the other companies in the same industry, the Company prepared the details of hire-purchase receivables and financial lease receivables classified by aging as below:

Table of the balance of hire purchase receivables of the Company and BGPL classified by aging as at December 31, 2017

Age of receivables
Amount (Million Baht)
%
Not yet due 28,616.76 89.30
1 - 3 installments 2,360.44 7.37
4 - 6 installments 291.43 0.91
7 - 12 installments 244.07 0.76
Over 12 installments 531.64 1.66
Total* 32,044.34 100.00
Less: Allowance for doubtful accounts 696.97  
Hire purchase receivables - net 31,347.37  

Note:  * The hire-purchase receivables were calculated from the hire-purchase receivables net of unearned hire-purchase interest revenue before subtracting allowance for doubtful account  

Considering the above table at the end of 2017, the majority of hire-purchase receivables of the Company and BGPL were normal status. The receivables with no overdue balance and the receivables due within 3 installments equaled to THB 30,977.20 million, or 96.67 percent of the total hire-purchase receivables. The Company and BGPL have the efficient debt control and debt collection management system by assigning the officers to take care and monitor each customer’s payment closely. If there is any past due receivables, the responsible officers will closely follow up immediately.

Table of the balance of financial lease receivables of BGPL classified by aging as at December 31, 2017

Age of receivables Amount (Million Baht)
%
Not yet due 474.03 92.72
1 - 3 installments 9.40 1.84
4 - 6 installments 1.81 0.35
7 - 12 installments - -
Over 12 installments 26.03 5.09
Total* 511.26 100.00
Less: Allowance for doubtful accounts 39.71  
Financial lease receivables - net 471.55  

Note:  * The financial lease receivables were calculated from the financial lease receivables net of unearned interest revenue before subtracting allowance for doubtful account

Considering the above table at the end of 2017, the majority of financial lease receivables of BGPL were normal status. The receivables with no overdue balance and the receivables due within 3 installments equaled to THB 483.42 million, or 94.56 of the total financial lease receivables.

Table of the balance of factoring receivables of BGPL classified by aging as at December 31, 2017

Age of receivables Amount (Million Baht)
%
Not yet due 348.99 71.52
1 - 3 months 46.55 9.54
4 - 6 months - -
7 - 12 months - -
Over 12 months 92.39 18.94
Total 487.93 100.00
Less: Allowance for doubtful accounts 92.39  
Factoring receivables - net 395.54  

Considering the above table at the end of 2017, the majority of factoring receivables of  BGPL were normal status. The receivables with no overdue balance and the receivables due within 3 months equaled to THB 395.54 million, or 81.06 percent of the total factoring receivables.

The adequacy of the Company and BGPL’s provision for doubtful account expenses

Due to the strengthened collection efficiency, the augmented base of portfolio size, and bad-debt write-off, the Company and BGPL’s NPLs at the end of year 2017 was THB 845.79 million, or 2.51 percent of the total receivables (before allowance for doubtful accounts). Moreover, the ratio of Allowance for doubtful accounts to NPLs was still high at 99.00 percent reflecting the adequacy of the Company and its BGPL’s allowance for doubtful accounts.

Land, Building and Equipment and Intangible assets

Land, Building and Equipment and Intangible assets (Intangible assets such as computer programs) of the Company and its subsidiaries at the end of the year 2015 - 2017 amounted to THB 153.09 million, THB 153.06 million and THB 141.48 million respectively. The land, building and equipment and Intangible assets at the end of 2017 decreased by 7.57 percent from end of 2016, mainly from the decreased of value of building and equipment, and intangible assets regarding the depreciation and amortization.

Assets Foreclosed 

Assets foreclosed of the Company and BGPL such as vehicles and equipments repossessed from contractual customers’ default, at the end of the year 2015 - 2017 amounted to THB 39.27 million, THB 43.82 million and, THB 120.00 million respectively, comprised of 83 contracts, 71 contracts and 150 contracts respectively which considered to be very low comparing to the total numbers of contracts at the end of the year 2015 - 2017 amounted to 44,779 contracts, 45,334 contracts and 46,307 contracts respectively. This was resulted from the Company and BGPL’s efficient in control system and collection process along with high liquidity of financed assets.

Total Liabilities

Total liabilities of the Company and its subsidiaries at the end of the year 2015 - 2017 amounted to THB 25,902.49 million, THB 27,128.20 million and THB 29,168.28 million respectively. The total liabilities at the end of 2016 increased by 4.73 percent from end of 2015 and total liabilities at the end of 2017 increased 7.52 percent from end of 2016. The increases in liabilities were mainly from an increase in the borrowings to support the growth of portfolio.

Table presents details of total liabilities of the Company and its subsidiaries

Liabilities As at December 31, (Unit : Million baht)
2015 % 2016 % 2017 %
Bank overdrafts and short-term loans from banks 4,518.97 17.45 5,225.41 19.26 5,038.00 17.27
-   Bank overdrafts and loans from related party 304.97 1.18 1.41 0.01 - -
-   Bank overdrafts and loans from others 4,214.00 16.27 5,224.00 19.25 5,038.00 17.27
Current portion of long-term loans from related party 2,000.00 7.72 0 0 800 2.74
Current portion of long-term loans from banks 3,100.00 11.97 3,050.00 11.24 2,450.00 8.4
Unsecured debentures, due in 1 year 2,224.24 8.59 2,899.51 10.69 1,339.83 4.59
Other short-term unsecured debentures 3,593.82 13.87 5,339.79 19.68 7,549.72 25.88
Other current loans 1,666.02 6.43 60.93 0.22 - -
Total current liabilities 17,103.04 66.03 16,575.64 61.09 17,177.55 58.89
Long-term loans from related party - net of current portion due in 1 year 800 3.09 2,800.00 10.32 2,000.00 6.86
Long-term loans from banks - net of current portion due in 1 year 3,700.00 14.28 3,850.00 14.19 5,495.94 18.84
Unsecured debentures - net of current portion due in 1 year 3,598.10 13.89 3,123.37 11.51 3,642.65 12.49
Total non-current liabilities 8,098.10 31.26 9,773.37 36.02 11,138.59 38.19
Total loans 25,201.14 97.29 26,349.01 97.11 28,316.14 97.08
Other liabilities /1 701.35 2.71 779.19 2.89 852.14 2.92
Total liabilities 25,902.49 100 27,128.20 100 29,168.28 100

Source: Audited 2015 - 2017 consolidated financial statements of Asia Sermkij Leasing Public Company Limited.

Note: 1/ Other liabilities consisted of amounts due to related parties, income tax payable, other current liabilities, rental deposit, and provision for long-term employee benefit, etc.

The Company and its subsidiaries had short-term borrowings (Including the current portion of long-term borrowings that due within 1 year) at the end of 2015 - 2017 amounted to THB 17,103.04 million, THB 16,575.63 million and THB 17,177.55 million respectively, or equaled to 66.03 percent, 61.09 percent and 58.89 percent of total liabilities at the end of 2015 - 2017 respectively.

The Company has diversified the sources of fund to both money market and capital market via issuing debt instruments to institutional and high net worth investors. The Company has balanced the proper portion between short-term and long-term borrowings according to the interest rate trend. This could help the Company and its subsidiaries to manage the cost of fund and balance risk efficiently.

The borrowings (both short-term and long-term loans) of the Company and its subsidiaries from related parties at the end of the year 2015 - 2017 amounted to THB 3,104.97 million, THB 2,801.41 million and THB 2,800.00 million respectively, or equal to 11.99 percent, 10.33 percent and 9.60 percent of the total liabilities at the end of the year 2015 - 2017 respectively.

Debt to equity ratio of the Company and its subsidiaries at the end of the year 2015 - 2017 equaled to 5.96 times, 5.93 times and 6.04 times respectively.

Shareholders’ equity

Shareholders’ equity of the Company and its subsidiaries at the end of the year 2015 - 2017 amounted to THB 4,346.99 million, THB 4,578.34 million and THB 4,830.91 million respectively. Such increase was due to the good operating performance that raised the retained earnings. In 2017, the retained earnings equaled to THB 2,351.82 million.

Return on Equity during 2015 - 2017 equaled 16.41 percent, 16.16 percent and 16.19 respectively.

Liquidity

As at December 31, 2017 the loan repayment and the installment to be obtained in different period were summarized as follows:

Period Loan Repayment Due
(Million Baht)
Installment to be Obtained from Debtor
(Million Baht)
Within 1 year 17,178.00 14,840.95
More than 1 year but not more than 2 years 4,985.00 10,542.80
More than 2 years but not more than 3 years 6,160.00 6,885.57
More than 3 years - 4,523.01
Stop accrued account receivables - 926.00
Total 28,323.00 37,718.33

Note: Bill of exchanges shown and Debentures were shown at face value from share certificate.

The gap difference between the installment expected to be obtained within 1 year and loan repayment due in 1 year of THB 2,337.05 million was mainly resulted from the current portion of long-term loan and unsecured debentures amounted to THB 3,789.83 million. This would not affect the Company and its subsidiaries liquidity since the Company and its subsidiaries have been considered the very good credit customers who have never been called for default from the banks even during the economic crisis. Therefore, the Company and its subsidiaries always received the new credit facilities when it comes maturity.

In addition, the Company and its subsidiaries still have the unused credit line from financial institutions amounting to approximately THB 7,592.00 million. These factors reflected the credibility and sufficiency in the financial status of the Company and its subsidiaries. Nevertheless, the Company and its subsidiaries have continually improved the funding structure by gradually switching the short-term borrowings into long-term borrowings at the appropriate level according to the trend of interest rates and by diversifying the sources of fund from the bank’s loan to the debt and capital market in order to manage the funding cost efficiently and balance the risks accordingly.

Cash Flow

The Company and its subsidiaries had the profit before tax during the year 2015 - 2017 amounted to THB 853.72 million, THB 867.79 million and THB 920.22 million respectively. After adjusting the non-cash expenditures and the change in assets and liabilities, the Company and its subsidiaries had the net cash flow used in operating activities during the year 2015 - 2017 amounted to THB 41.62 million, THB 663.19 million and THB 1,255.35 million respectively. This was mainly resulted from an increase in hire purchase receivables during the year 2015 - 2017 by THB 803.80 million, THB 1,800.40 million and THB 2,362.84 million respectively. The cash flow that used for increasing factoring receivables during the year 2015 - 2017 increased by THB 5.53 million, decreased by THB 281.10 million and THB 302.97 million respectively. The cash flow used for increasing financial lease receivables during the year 2015 - 2017 decreased by THB 36.82 million, THB 132.52 million and THB 197.65 million respectively.

The net cash flow used in investing activities of the Company and its subsidiaries during the year 2015 - 2017 amounted to THB 72.98 million, THB 26.01 million and THB 14.92 million respectively. These amounts were mainly from an increase in the Company and its subsidiaries’ investment in land, building and equipment during 2015 - 2017 totaling THB 64.76 million, THB 27.15 million and THB 15.72 million respectively. The Company and its subsidiaries also invested in intangible asset which was information system to enhance operation efficiency in the amount of THB 4.18 million, THB 1.04 and THB 1.18 million respectively.

Moreover, the net cash flow from financing activities of the Company and its subsidiaries during the year 2015 - 2017 amounted to THB 90.75 million, THB 670.20 million and 1,480.52 respectively.