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KBank adopts strategy for AEC+3

Posted by pakin On February - 17 - 2016 ADD COMMENTS

KASIKORNBANK plans to set up regional headquarters to manage the operating costs of its overseas footprints once it has full physical branches in Vietnam, Indonesia and Myanmar, senior executive vice president Pipit Aneaknithi said yesterday.

KBank wants to upgrade its representative offices to branches in the three markets next year, but the actual execution timetable is unpredictable because regulations in those countries do not currently permit the granting of additional banking licences to foreign banks, he said.

Given KBank’s aspiration to be a regional bank for AEC+3 (Asean Economic Community, plus China, Japan and South Korea), an integrated regional operating platform can help manage costs and human resources as opening a presence in a foreign market normally requires at least five years to reach break-even point, he explained.

Its business in Laos, however, was able to generate a profit after just one year of operating as a local bank, because Laotians were familiar with the KBank brand, he said. It will therefore open a second branch in the country in September to cater to wealthy customers.

KBank has seven branches overseas – four of them in China – as well as eight representative offices.

DTAC plans heavy 4G investment

Posted by pakin On February - 10 - 2016 ADD COMMENTS

Total Access Communication (DTAC) is committed to investing Bt70 billion from this year to 2018 on the continued expansion both of its fourth-generation wireless broadband coverage and of bandwidth capacity nationwide as well as on heavy marketing campaigns to grow its revenue.

Lars Norling, chief executive officer of DTAC, said yesterday that it would vigorously defend its turf.

According to DTAC’s recently filing to the Stock Exchange of Thailand, it expects competition to remain intense this year, especially for 4G service offerings.

It has set a capital-expenditure budget of Bt20 billion for this year, similar to last year’s level, to expand 4G networks on both the 1,800-megahertz and 2.1-gigahertz bands.

According to Advanced Info Service’s recent filing to the SET, it has budgeted Bt40 billion this year mainly for the 4G network roll-out and for 3G network enhancement.

Recently True Corp CEO Suphachai Chearavanont said True would spend Bt55 billion over three years on the expansion of its 4G service on the 1,800MHz, 2.1GHz and 900MHz spectra, and on the development of 2G service on 900MHz.

Expanding bandwidth

As part of the move to safeguard its market share, DTAC will increase 4G bandwidth on the 1,800MHz spectrum to 20MHz from 15MHz on 1,800MHz and the existing 5MHz on 2.1GHz.

It will also expand its 4G-1,800MHz coverage to 77 provinces by next quarter and 4G-2.1GHz coverage to all 878 districts nationwide by the third quarter.

It has recently introduced heavy call and data and smartphone |packages and has also launched a campaign to encourage its nearly 3 million 2G subscribers to upgrade their phones to 4G/3G smartphones.

DTAC has 25.3 million subscribers, of whom 2.3 million are on 4G. It is adding 200,000 4G subscribers a month with the goal of reaching a total of 4.5 million by year-end.

New brand platform

DTAC is also planning to unveil a new brand platform to solidify its image and market positioning.

AIS is in talks with DTAC about allowing AIS’s 2G subscribers to roam on DTAC’s network. However, no deal has been signed with AIS yet, Norling said.

AIS and True secured 1,800MHz licences in the November auction, while True and Jasmine International grabbed 900MHz licences in the December auction.

TCC set to take on retail giants

Posted by pakin On February - 9 - 2016 ADD COMMENTS

TCC Group, owned by billionaire Charoen Sirivadhanabhakdi, will emerge as a leading retail chain in Thailand after buying a 58.56% stake in SET-listed Big C Supercenter Plc for 122 billion baht.

The acquisition has fulfilled Mr Charoen’s dream of owning a retail distribution channel after failing with bids for Carrefour’s Thai assets and Makro’s cash-and-carry operations in the country in recent years.

Big C’s shares surged 9.69% to 249 baht after news of the deal was confirmed yesterday.

A source said Mr Charoen paid 2-3% more than Central Group’s offer to win the bidding for Big C shares because it was his last opportunity to operate such a big retail store network. Charoen Pokphand (CP) Group came third in the fierce bidding.

“The past bidding failures for Carrefour and Makro taught Mr Charoen a good lesson. This time, he could not afford to lose,” the source said.

In a statement to the Stock Exchange of Thailand, Big C said it had been informed by Casino Group that Geant International BV, its major shareholder, had entered into a share sale agreement with TCC.

The agreement is for 483,077,600 shares Casino holds directly and indirectly in Big C, representing a 58.56% stake. The selling price is 252.88 baht a share.

The completion of the sale is expected by March 31.

Big C said in its statement that the total price of the shares might be reduced by an amount corresponding to the amount of dividend that might be paid by the company to the seller, pursuant to a resolution of the 2016 annual general shareholders’ meeting.

The company has 125 large stores (Big C Supercenter, Extra and Jumbo), 55 Big C Markets, 394 Mini Big Cs and 146 Pure Drugstores.

An industry source said TCC Group expected its manufacturing business would benefit from the nationwide Big C store network.

Somchai Pornrattanajaroen, president of the Thai Retailing and Wholesaling Association, said TCC Group would be able to reach various customer groups with the Big C network, which includes hypermarkets, supermarkets, convenience stores and health and beauty outlets.

This increases the opportunity for TCC Group to widen its distribution channels for its products and access customers more easily.

Mr Somchai believes Central Group is likely to sell part of its 25% stake in Big C.

The industry source expects TCC and CP will compete head on in bidding to buy Tesco Lotus if its British owner decides to sell its Thai operation.

“I’m not worried about TCC, but I’m worried about CP Group. If it wins Tesco Lotus, CP will dominate the Thai retail industry. It now owns Makro cash-and-carry stores and 7-Eleven convenience stores,” the source said.

Maybank Kim Eng Securities (Thailand) yesterday said in a research note the acquisition would pave the way for TCC to add value to its consumer product business.

It will also help Berli Jucker Plc and Oishi Group Plc, both of which are also owned by Mr Charoen, to gain bargaining power against modern trade buyers and boost the group’s profitability, the note said.

The deal could be positive for Big C’s growth, as the brokerage expects to see more aggressive expansion by the retailer.

However, Maybank Kim Eng recommends investors take profits when Big C’s share price rises to a level close to the tender offer price while waiting for TCC’s policy on Big C’s business direction.

Pimolpa Suntichok, a first executive vice-president of Siam Commercial Bank, said TCC’s acquisition was expected to use the same financial funding model as CP All’s takeover of Siam Makro Plc in 2013.

TCC may seek bridging loans as short-term funding sources before transforming them into syndicated loans, she said.

Meanwhile, Big C will continue its 2016 strategic investment plan with a budget of 6-7 billion baht for store expansion and renovations, chief financial officer Rumpa Kumhomreun said.

Big C will open six hypermarkets, three Big C Markets and 75 Mini Big C stores.

BIGC shares closed yesterday on the SET at 249 baht, up 22 baht, in heavy trade worth 2.65 billion baht.

3M exec predicts long economic slowdown

Posted by pakin On February - 2 - 2016 ADD COMMENTS

HAK CHEOL SHIN, executive vice president of international operations for US-based multinational industrial conglomerate 3M, believes the world is at the start of what will be a prolonged period of slow economic growth that will claim many casualties in the corporate world.

Hak said one of the main contributing factors for this was the emerging-market slowdown, particularly in China, which he labelled a new phenomenon.

Other major factors he cited as among the major causes included the collapse of prices for oil and gas and other commodities, and the weakening of global currencies.

The United States will be among the very few economies that will be an exception to this global slowdown phenomenon, he said.

Despite the gloomy outlook, Shin believes the Chinese economy will not have a feared hard landing.

He said the low-growth problems were compounded by “mega-events” such as geopolitical incidents that were unpredictable. As a result, he said companies had to improve their “responsiveness” and learn to operate in the “new reality”, such as over-capacity being a problem, particularly for multinational companies.

“Two key words: quickly and effectiveness. We have to become like a chameleon. Many companies will become history,” he said.

“Any company, small or big, cannot be complacent at this period.”

In a bid to cope better with the forecast prolonged slowdown, 3M has developed what it calls the “play book”, which is in essence “scenario planning” on how it will respond when a major event erupts.

The company’s diversified products, markets, and geographic portfolio will help it weather the current situation, he said.

“Healthcare, consumer, safety businesses are among [our businesses] that are still doing very well. Domestic-driven industries tend to do better in this period,” he said. “While people are not putting in new fibre-optic cable, they’re still going to hospitals.”

Hak said 3M executives considered themselves “portfolio managers” whose task was to make the right choices at the right time involving three dimensions – the product, market, and geographical portfolios. Given the current economic scenario, the US$31.8-billion (Bt1.1 trillion) company is investing in growth areas including Southeast Asia, he said.

And despite the challenging economic times, he said 3M was increasing its research and development budget.

“Since our current CEO assumed the post in 2012, he made a statement to increase R&D from 5.5 per cent to 6 per cent of sales. We’re following his statement,” Shin said.

“R&D and commercialisation are probably our main strategies to grow. We’re investing $1.8 billion every year in R&D,” he said.

Hak said Thailand was 3M’s biggest market in Southeast Asia, accounting for about 35 per cent of its sales in the region, which totalled about $1 billion annually.

Thailand is also one of 3M’s most “penetrated” markets in the world, as measured by the size of its business in the country versus the size of the economy. He said the company tried to replicate its success in Thailand to elsewhere.

The company appointed Napaporn Ratanasaenghirun as its first Thai managing director last November. Napaporn had previously led 3M Vietnam, where she doubled 3M sales during her three-year term. Hak said 3M Thailand had continued to outperform the economy, growing its business at a higher percentage than the growth of gross domestic product for many years. It plans for that to continue.

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