Expansion of the Digital Finance Business across ASEAN and Investment in Growth Regions

「Given the ongoing major litigation involving Group Lease PCL. and its subsidiaries, which operate this business, and their disputes with the J Trust Group, we have restrained new lending in all operating countries and focused on collections as part of conservative risk management. As a result, both revenue and profit have declined, and the difficult situation caused by litigation-related costs is expected to continue for the next several years. Going forward, we aim for a new phase of renewed growth according to conditions by country and product.」

「From 2025 onward, we will begin a new phase of renewed growth according to conditions by country and product. At the same time, all countries are being affected by the adverse effects of global inflation, so we will carefully assess developments while pursuing business growth.」

「In 2023, operations were divided between Cambodia and Thailand, which had entered the recovery phase following the COVID-19 pandemic, and Myanmar, Laos and Sri Lanka, which were facing economic hardship due to extreme currency depreciation and political instability. In Cambodia and Thailand, new contracts had already begun to increase, leading to higher revenue and profit. Meanwhile, in Myanmar, Laos and Sri Lanka, which were facing economic hardship, prices of imported products such as motorcycles had risen extremely sharply, to more than double their previous levels. This reduced potential customers’ willingness to purchase and their relative ability to repay, meaning that conditions were not suitable for expanding leasing and similar businesses. In Myanmar and Sri Lanka, we also conduct direct lending, and demand in this area remains firm, with lending increasing and the business beginning to perform well. The end of the Indonesian business, which had reported losses for several consecutive years, will support future results.」

「New contracts have already increased in Cambodia and Thailand, leading to higher revenue and profit. By contrast, in economically distressed Myanmar, Laos and Sri Lanka, prices of imported motorcycles and other products have risen more than twofold, reducing prospective customers' willingness to buy and their relative repayment capacity. Conditions therefore do not support expanding leasing and similar businesses. In Myanmar and Sri Lanka, however, direct lending to individuals, in addition to leasing, is a core business, and demand in this area remains firm. Lending is increasing and performance is beginning to improve.」

「In Myanmar and Sri Lanka, we also provide direct lending. Demand in this area remains firm, and lending is increasing, with the business beginning to perform well.」

「In 2022, the region was divided between Cambodia and Thailand, which had entered recovery from the COVID-19 pandemic, and Myanmar, Laos and Sri Lanka, which were facing economic hardship because of extreme currency depreciation and political instability. In Cambodia and Thailand, new contracts had already increased, leading to higher revenue and profit.」

「Operating loans have clearly expanded in Cambodia, where political and economic conditions are relatively stable, and have also begun to increase in some businesses in Thailand.」

「The Group has reached the stage of gradually shifting from a policy focused on collecting operating loans to gradually extending loans and expanding the portfolio.」

「Our focus on collecting operating loans has resulted in a substantial increase in cash on hand. We are preparing to deploy these funds and take action when opportunities arise, while continuing to make careful decisions.」

「For this business, the recovery of Southeast Asian countries from the COVID-19 pandemic will be the focus going forward.」

「We have determined that current conditions are not yet suitable for moving forward with business expansion, and will carefully assess opportunities for renewed business expansion.」

「We have determined that current conditions are not yet suitable for moving forward with business expansion, and will carefully assess opportunities for renewed business expansion.」

「We are closely monitoring economic conditions and demand in each country and have determined that it is not yet time to proceed with business expansion. Going forward, we will carefully assess opportunities to resume expansion.」

「We are closely monitoring economic conditions and demand in each country and have determined that it is not yet time to proceed with business expansion. Going forward, we will carefully assess opportunities to resume expansion.」

「After winning the case in Thailand last August, we changed to a proactive sales policy and have steadily increased new contracts. Operating loans continued to expand in Myanmar, began to expand again in Cambodia, remained broadly flat in Laos and Indonesia, and the decline in Thailand was beginning to moderate.」

「After winning the case in Thailand last August, we changed to a proactive sales policy and have steadily increased new contracts. Operating loans continued to expand in Myanmar, began to expand again in Cambodia, remained broadly flat in Laos and Indonesia, and the decline in Thailand was beginning to moderate.」

「Since winning the case in August last year, and particularly during the first quarter, new contracts have increased significantly, and we have decisively shifted toward a growth trajectory.」

「We temporarily froze entry into new countries and regions for the Digital Finance business and focused fully on structural reforms in countries and regions where we had already established operations. As a result, cash flow used in investing activities was reduced.」

「This is because we are expanding the business steadily in the Republic of the Union of Myanmar while pursuing structural reforms in both sales and collections in Thailand and Cambodia. Structural reforms in sales and collections in Thailand and Cambodia are now well advanced, and preparations are under way for expanded sales and increased profits from September, after the rainy season ends.」

「Sales from leasing, Group Loan and other businesses expanded in Thailand and Myanmar. In Cambodia and Indonesia, however, sales temporarily declined as we pursued business-model changes and restructuring.」

「In Cambodia and Indonesia, we have been restructuring the business model. In Thailand as well, we have conservatively revised the criteria for non-performing loans and are actively accelerating their early accounting treatment in order to improve the overall quality of receivables, which has put pressure on quarterly profit.」

「In Cambodia and Indonesia, sales temporarily declined as we pursued business-model changes and restructuring. In Cambodia and Indonesia, and also in Thailand to improve the overall quality of receivables, we have been actively accelerating the early accounting treatment of non-performing loans, which has put pressure on profit for the fiscal year.」

「We have also begun restructuring our earnings model across Asia to build a more profitable corporate structure. Going forward, we will (1) prioritize improving receivables quality and operational efficiency over increasing sales across the Group, (2) improve Group-wide governance by taking account of macroeconomic and microeconomic conditions in each country, and (3) reallocate resources and pursue new acquisitions. This is intended to achieve A. higher margins in the short term, B. strong growth from next year onward in the medium term, and C. ultimately, over the long term, to provide appropriate funding to local markets in Asia, improve people's lives and foster entrepreneurship in each country.」

「We have also begun restructuring our earnings model across Asia to build a more profitable corporate structure. Going forward, we will concentrate the Group's resources in Cambodia, which has a large portfolio, and in Indonesia, a huge market with the world's fourth-largest population, in order to build an organization capable of withstanding rapid growth.」

「We have also begun restructuring our earnings model across Asia to build a more profitable corporate structure. Going forward, we will concentrate the Group's resources in Cambodia, which has a large portfolio, and in Indonesia, a huge market with the world's fourth-largest population, in order to build an organization capable of withstanding rapid growth.」

「Going forward, we will further expand the current operating regions of the Digital Finance business into the Kingdom of Thailand, the Kingdom of Cambodia, the Lao People's Democratic Republic, the Republic of Indonesia and other parts of Southeast Asia. In addition to launching new businesses, including agricultural-equipment leasing and solar-power-generation leasing, we will pursue further expansion through M&A.」

「The businesses launched in the Republic of Indonesia in 2016 and the Republic of the Union of Myanmar in 2017 have been expanding extremely steadily. We are also introducing new business models and products in each country, which has increased upfront investment expenses.」

「During the second quarter, 2 new subsidiaries commenced operations in the Republic of the Union of Myanmar, while Group Loan operations began in the Republic of Indonesia. In the Kingdom of Cambodia, we also launched an asset-backed lending business.」

「The investment activities we have pursued over the past several years to expand the business have steadily produced results, and we have entered a phase of generating profits in the Kingdom of Cambodia, the Lao People's Democratic Republic and the Kingdom of Thailand. We have also commenced operations in the Republic of Indonesia. In Cambodia and Laos, continued investment in medium- to long-term growth initiatives since 2012 has brought us to a stage where profits are now increasing rapidly.」