Slowing economy tests Thai billionaires who built fortune on small loans

Bangkok, Thailand. Photo: Pixabay

Billionaire husband-and-wife team Chuchat Petaumpai and Daonapa Petampai built a fortune by providing small loans in Thailand. They now face a major test as a slowing economy crimps earnings growth.

Their micro-lender Muangthai Capital Pcl is on course for the weakest profit growth since its listing in 2014, stoking a 6.3% share-price drop in the past three months that exceeded the 1.7% decline in the benchmark SET index.

“We’re watching the economic situation carefully to see how it impacts repayment ability,” Chuchat said in an investor presentation Thursday. “A drought affected farmers’ incomes, and they are our biggest customers. That problem has eased, but we still need to assess the situation.”

Muangthai Capital grew rapidly by tapping into the demand for small loans among the millions of Thais, like farmers and blue-collar workers, who lack the credit history required by commercial banks. But an economic slowdown is squeezing incomes, debt serviceability and potentially demand for credit — a problem faced by major banks too.

“The company will find it hard to replicate the same exponential earnings growth as in past years because of more limited branch expansion,” said Chalie Kueyen, an analyst at KGI Securities (Thailand) Pcl in Bangkok.

Shareholdings

Muangthai Capital’s average annual earnings growth of 61% from 2014 to 2018 propelled a more than 10-fold surge in the firm’s shares after its initial public offering.

In the first nine months of this year, it reported a profit of 3.1 billion baht ($102 million), a climb of just 15% from the same period a year earlier.

Daonapa, 65, and Chuchat, 67, each have stakes in Muangthai Capital worth more than $1 billion, according to data compiled by Bloomberg. The company provides credit backed by motorcycles, automobiles and farm vehicles.

Average loan size is typically about 10,000 baht at an interest rate of around 24%, according to Chuchat. He said he still expects earnings growth through 2020 because of branch expansion, lower borrowing costs and strict risk management to curb bad debt.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.