Can ZMICO and the Car Coating Service Get Along Well?
ZMICO just recently announced that it had invested almost THB 40 million in a “car coating service” business. Will these two irrelevant businesses get along well?
The deficit of THB 195 million in 2018 may have caused Seamico Securities Public Company Limited (ZMICO) to change its course to find treasures in deserted islands to make up what has been lost. But the “car coating service” that ZMICO had invested in is just too irrelevant to its core business.
The amount invested in this business was reported at THB 37.8 million by ZMICO to acquire 12% of Crystal Sealed Professional Car Coating Co., Ltd. (CTS), a car service center of “Mr. Chinnapol Jongprasert” who is also a racer for CTS Motorsport.
ZMICO acquired 12% of CTS by buying 9,830 shares from Asia Classic Investment Limited and 22,920 shares from the subscription of newly issued shares at a total of THB 37.8 million in value in which ZMICO will use its internal cash flow for the investment.
The company believes that CTS has strong growth potential, not only in its existing businesses, but also, future expansion in the local and overseas market. ZMICO expects this investment to generate an additional return for the company from both dividends from CTS and future capital gain.
As for this “car coating service” business in 2018, CTS booked THB 74 million of revenue, THB 9.65 million of profit along with THB 38.78 million of asset and THB 29.05 million of liabilities.
After seeing the basic info of this business, is the investment of almost THB 40 million worth the 12% stake in CTS? But if it is about long-term investment, let’s wait and see how it progresses.
The diversity in business line for ZMICO reflects that business brokers are slowing down from lower profit which used to earn from brokerage and was considered a pile of treasure, but now turned out to be a hindrance instead.
This may have been only the beginning of ZMICO’s diversification in its business line. It should become clearer soon if ZIMCO will invest in other businesses or not. But there is a high possibility that business brokers will also aim for other businesses to invest in.
This is all because the business brokers are in a decline.