An Emerging New Risk for JMT and CHAYO
Both JMT and CHAYO are now facing a new risk that will cost its business dearly once the bank starts managing their own NLP.
JMT Network Services Public Company Limited (JMT) and Chayo Group Public Company Limited (CHAYO) whose business focuses on managing non-performing loans (NPL) are facing a new risk in the business when banks are starting to manage their own non-performing loan instead of selling/transferring to firms that specialize in managing NLP like JMT and CHAYO.
This turn of events will cost JMT and CHAYO dearly. Both companies used to earn 25%-35% gross profit margins, but there is no telling how much it will be once the procedures have changed while more than 90% of both companies’ revenues come from the management of non-performing loans.
What comes next is the increase of bargaining power for the bank. Normally, the bank would cut 80%-90% off the loan and sell it to the managing firm, but that will hardly be achieved or maybe not achievable at all once the bank takes over the management of NPL for itself.
The one who once was responsible for managing NPL from the bank may end up as the bank’s debt collector. The highlight investors need to see is how JMT and CHAYO will adjust to this change.
CHAYO has started expanding its business to personal loan and nano and pico finance loan under an operation of its subsidiary, Chayo Capital Company Limited. While its real estate business under the operation of Chayo Property and Service Company Limited is still in progress and will come to a clear view in the first quarter of 2019.
As for JMT, the company may need to focus on a vehicle loan and personal loan, even though these businesses do not create income and yield profit to JMT much.
However, when the situation has changed JMT also has to change as well.