Aug. 21--Thitikorn Plc (TK), the motorcycle hire-purchase lender, projects revenue growth of 16 percent this year as it expands upcountry and into new lending businesses.

TK reported first-half revenues of 1.33 billion baht, up from 1.22 billion in the same period last year. Net profit, however, fell to 143.57 million baht from 169.19 million. Second-quarter net profit dropped to 78.9 million baht from 88.66 million a year earlier.Prapol Phornprapa, a TK deputy managing director, said that even though revenues rose, profits fell as the company continued to expand and invest in its branch network. The company plans to open two or three new branches over the next few months to increase its current network of 75 stores.

"We are also looking to expand into auto leasing as competition in Bangkok has fallen. We will also consider other new businesses, such as credit cards or electronic appliance hire-purchase loans for the future," he told investors at a briefing at the Stock Exchange of Thailand yesterday.

Nearly 70 percent of TK's revenues currently come from motorcycle leases. The company, which claims a 25 percent market share in Greater Bangkok, had outstanding loans of 5.7 billion baht at the end of June compared with 5.2 billion at the end of 2008.

Asset quality has remained relatively stable, with non-performing loans, defined as at least six months past-due, at 2.5 percent of total loans at the end of June. Doubtful debt, representing accounts past-due at least four months, were 4.5 percent of total loans.

Mr Prapol said the company had increased downpayment requirements to 20 percent of the purchase price compared with 5-10 percent in the past to help reduce credit risk.

In any case, profit declines were to be expected considering the decline in vehicle sales in the economic downturn. High competition in the industry would also affect profits, although TK has been able to maintain margin spreads at around 30 percent, with its cost of funds now at around 4 percent to 5 percent.

Mr Prapol said TK had also set up credit lines of 2.5 billion baht to purchase motorcycle or car lease assets if the pricing was reasonable.

TK shares closed yesterday on the Stock Exchange of Thailand at 3.44 baht, up four satang, in trade worth 79,000 baht.

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