The partnership between Chayo Group Public Company Limited (CHAYO) and Union Auction Public Company Limited (AUCT) has captured stock markets’ attention as investors believe the synergy could bring the best of both businesses, a win-win for CHAYO and AUCT.
This joint investment primarily aimed to focus on purchasing non-performing assets, particularly automobiles and managing them after that.
CHAYO provides debt collection service and manages non-performing assets (NPA) and non-performing loans (NPL), the business that has a growing trend due to a continued increased debt volumes.
In 2018, CHAYO reported a total revenue of 264 million baht and a net profit of 85 million baht (NPM was 32.30%). In 2019, revenue increased to 317 million baht, as well as net profit that rose to 111 million baht (NPM was 35.05%). Meanwhile a total revenue for the nine-month period of last year stood at 378 million baht, reflecting an outstanding performance compared to 2019, and a net profit was 119 million baht (NPM was 31.42%).
Nowadays financial institutions and nonbanks have sold more automobile loans, creating advantages to debt purchasers as there is a collateral for those loans and debts, and mostly are short-term debts, providing an opportunity for CHAYO. But CHAYO still lacks expertise in the area of conducting an auction.
Therefore, teaming up with AUCT could fill the needs of CHAYO, enabling CHAYO to have more distribution channels and to gain a benefit from car sales.
AUCT is an expert in organizing a variety of auctions as well as providing services that are related to auction. At the same time this partnership would bring more assets to the auction, offering a great opportunity for AUCT to get more fees.
In 2017, AUCT’s total revenue was 564 million baht and net profit was 103 million baht (NPM was 18.42%). In 2018, a total revenue was 698 million baht and a net profit was 170 million baht (NPM was 24.42%). In 2019, AUCT reported a total income of 812 million baht, along with a net profit of 234 million baht (NPM was 28.83%). Meanwhile the first nine months of 2020 income was 654 million baht and earnings was 162 million baht (NPM 24.84%).
So, the synergy between CHAYO and AUCT is expected to provide access to greater profit and revenues of both companies, and will complement each other by sharing talent, know-how and expertise.