Amid fierce competition in Thailand's car rental services, SET-listed Synergetic Auto Performance Plc (ASAP) is holding firm but diversifying through the car-sharing digital platform.
For 2019, Synergetic has set aside 3-4 billion baht to expand in four key areas: long-term rental, short-term rental, ASAP Go car-sharing and ASAP Select franchise.
For long-term services, Synergetic will buy a new car fleet of 3,000-4,000 units in 2019, for a total of 20,300 cars covering corporate contracts and chauffeur services, said Songvit Titipoonya, the company's chief executive.
"Our core competency is long-term car rentals, which represent 80% of our car rental revenue," he said. The rest of revenue comes from short-term rentals, both bookings at airports and use of the car-sharing mobile app.
Mr Songvit said overall car rental sentiment in 2019 will be driven by the country's tourism sector and rising economic activity.
For the tourism sector, Synergetic aims to increase its 2019 operating rate of 100,000-120,000 rented days, past the break-even level of 90,000-100,000 rented days a year.
"The company will provide 1,500-2,000 cars in 2019 for short-term services, with a 65% utilisation rate, and expand branches to cover major cities in Thailand through airports and ASAP Auto Park," Mr Songvit said.
ASAP has seven service spots at international airports: Suvarnabhumi, Don Mueang, Phuket, Chiang Mai, Chiang Rai, Hat Yai (Songkhla) and U-tapao (Rayong-Chon Buri).
ASAP has connected with car-rental booking websites to reach more foreign customers with six online travel agents: Booking.com, Expedia, Rentalcars.com, CarTrawler, ZuzuChe.com and Ctrip.
"According to the Tourism Authority of Thailand, the country remains the world's top tourism destination with 38.3 million arrivals in 2018, up 7.5%, generating 2.01 trillion baht for the period, up 9.6%," Mr Songvit said. "Thais travelled domestically 226.1 million times in 2018, generating income of 1.07 trillion baht, so the car-rental industry can be driven by the country's domestic tourism sector."
For the ASAP Go mobile app used for car-sharing, the company will emphasise the business-to-business segment and allocate 400-600 cars to park at many large companies in 2019, up from 100 in 2018.
ASAP Go launched its car-sharing service in 2017 in a collaboration with Thai startup Haupcar, but ASAP operates the service alone.
Songvit: Expanding to 40-50 companies
"We want to expand our car-sharing services to 40-50 companies in 2019," Mr Songvit said. "We are joining hands with Toyota Motor Thailand, Toyota Daihatsu Engineering and Manufacturing, Siam Cement Group, Betagro Group and Kasikornbank to provide ride-sharing services at their buildings."
The company's latest business -- ASAP Select franchise -- plans to expand car rental franchise rights to five investors in Bangkok, Nonthaburi, Chiang Mai, Nakhon Ratchasima and Ubon Ratchathani, he said.
Mr Songvit expects revenue-sharing from franchisees by the fourth quarter of 2019. The company plans to expand franchise rights for ASAP Select to 30 investors by 2023.
Synergetic forecasts 2019 revenue growth of 25-30% on business expansion and growth in the car-rental industry.
Mr Songvit said Synergetic has no plans to increase capital in 2019, though it had a debt-to-equity ratio of 7.46 last year.
"We will leverage our financial capabilities to take out loans from financial institutions, but we will not issue debentures because the local bond market is not attractive to investors," he said.
Founded in 2006, the company posted 2018 revenue of 2.63 billion baht, up 25% from the year before, driven by 2.22 billion baht from the car-rental business. Of a total fleet of 17,142 cars last year, 5,747 were new additions to the portfolio.
The used-car business, making up 16% of ASAP's total revenue, fell 4% to 415 million baht. Sales for the period stood at 911 cars, down from 1,172 a year earlier.
Synergetic's net profit in 2018 fell by 41% to 90 million baht because of higher operating and financial costs.
Mr Songvit said the car rental market in 2018 is projected to grow by 6-8% to 45-45.9 billion baht.
"From 2006-17, the compound average growth rate stood at 15%, with a market value of 10.5 billion baht in 2006 to 42.5 billion in 2017," he said. "Long-term car rentals made up 70% of the market value, while short-term rentals accounted for the remainder."
As a result of market sentiment, the company is optimistic about recording 3 billion baht in revenue by 2020.
ASAP shares closed Friday on the Stock Exchange of Thailand at 2.90 baht, unchanged, in trade worth 6 million baht.
