THE OVERALL PICTURE OF THAILAND’S ECONOMY IN 2019 HAD THE GROWTH RATE OF 2.4%, WHICH DECREASED WHEN COMPARED WITH THE GROWTH RATE OF 4.2% IN 2018, AS AN IMPACT RESULTED FROM THE SLUGGISH GLOBAL ECONOMIC SITUATIONS. THE KEY FACTORS WERE FROM TRADE BARRIERS BETWEEN USA AND CHINA, BOTH DOMESTICALLY AND INTERNATIONALLY POLITICAL SITUATIONS AND THE COUNTRY’S DIRECTION OF MONETARY POLICY IMPLEMENTATION WHICH AFFECTED THE ONGOING APPRECIATION IN THAI BAHT, INCLUDING DROUGHT’S IMPACT ON THE AGRICULTURAL INDUSTRY.
In 2019, MBK GROUP conducted its business with its corporate competency and ongoing efficiency improvement. As a result, MBK GROUP has had its growth rate and has given returns to shareholders continuously. The overall picture of MBK GROUP’s operational results of 31st December 2019 when compared with 2018 were as follows:
The operating revenue was Baht 12,250 million, a decrease of Baht 443 million or 3%, and the net profit attributable to equity holders of the Company was Baht 2,800 million, a decrease of Baht 81 million or 3%. In 2019, the revenue recognition of special interim dividend of Baht 533 million was carried out by an associated company which had excess liquidity from a business restructuring within the group. In 2018, the recognition gains on sales of investment in available-for-sale marketable securities of a company operating the hotel business and investments in an associated company operating the hotel business for a total was Baht 1,163 million (net of related tax impact). However, if abovementioned transactions were not included, the net profit attribute to equity holders of the Company for the years 2019 and 2018 were Baht 2,267 million and Baht 1,718 million respectively, an increase of Baht 549 million or 32%.
The financial status of MBK GROUP, as of 31st December 2019, compared with 2018, had major changes as follows: The total assets were Baht 52,443 million, an increase of Baht 3,347 million or 7%. Total liabilities were Baht 27,737 million, an increase of Baht 1,325 million or 5%. Such total liabilities consisted of interest-bearing debts totaled Baht 16,777 million and non-interestbearing debts totaled Baht 10,960 million. Total equities were Baht 24,706 million, an increase of Baht 2,022 million or 9%.
In 2019, MBK GROUP had major operations as follows:
The Shopping Center Business. MBK Center has had renovations and improvements continuously in order to maintain its status as one of the most preferred tourist destinations. For the improvement of the shopping center, the rental spaces and the central areas inside the building were renovated- the rental spaces on the 3rd floor in Zone D, the central area on the 4th floor of Zone D for a space for organizing activities so that customers could rent this space for selling more products or providing more services and the rental space on the 6th floor in Zone D so that customers could rent this space for a co-working space in order to fully increase convenience, modernity and satisfaction for tenants and services users.
Also, the logo of MBK Center was changed in order to harmonize with the brand structure of MBK GROUP which encourages the brand “MBK” to have the unity and be more recognized by several customer groups, as well as strengthening the shopping center’s management so that it will be the unique MBK Center-styled shopping center with a variety of products and services, enjoyment beyond expectation and reflection of its own identity of MBK Center which differentiate itself from other shopping centers. Moreover, because of its determination to develop the organization continuously, MBK Center was given the award named Thailand Quality Class 2019 (TQC) for Performance Excellence by the Office of Thailand Quality Award. It is a prestigious award expressing the organization’s performance excellence up to the world’s standards.
For the Shopping Center Business, Siam Piwat Co., Ltd. (SPW), as an associated company as of 31st December 2019, held 48.66% of shares. Its equity recognition in 2019 was Baht 507.04 million with its progress of these projects as follows:
The ICONSIAM condominium project consists of 2 condominium buildings- the Magnolias Waterfront Residence and the Residence At Mandarin Oriental Bangkok. It is expected that all condominium units will be transferred to customers within 2021. The True Icon Hall- the world-class convention center at ICONSIAM- covers an area of more than 12,000 square meters. It is situated on the 7th floor and the 7thM floor and has opened since September 2019.
Moreover, SPW has jointly invested with Simon Property Group, the world’s leading retail property developer, to open Bangkok’s first Luxury Premium Outlet on 150-rai plot of land. It is anticipated to open in the middle of 2020.
For the overall picture of the ICONSIAM project’s 2nd phase situated in front of the ICONSIAM project, there is approximately 15% progress in the project’s construction. The project consists of 2 main parts- the one for stores and a supermarket which are situated on the lower part of the building and the other for the upper part of the building. They are expected to open approximately in the middle of 2021 and in late 2022 respectively.
While the construction of the gold-line monorail system has its over 60% progress and is expected for its completion as planned in late 2020.
In 2019, the ICONSIAM project received awards in fields as follows:
- The gold award winner of the World Retail Awards 2019 for “the World’s Best Store Design”.
- The gold award winner of Asia-Pacific STEVIE Awards 2019 for “Multimedia Water Features-Southest Asia’s longest water feature”.
- The gold award winner of International Council of Shopping Centers’ (ICSC) Asia Pacific Shopping Center Awards for “New Developments”.
- The gold award winner of International Council of Shopping Centers’ (ICSC) Asia Pacific Shopping Center Awards for “Businessto-Business” (B2B).
- The gold award winner of International Council of Shopping Centers’ (ICSC) Asia Pacific Shopping Center Awards for “Grand Opening, Expansion and Renovation”.
- The gold award winner of International Council of Shopping Centers’ (ICSC) Asia Pacific Shopping Center Awards for “Public Relations and Events”.
The Hotel and Tourism Business. It is committed to develop its potential for providing services at international level, renovating hotel rooms, improving the basic infrastructure of the Hotel and Tourism Business and expanding investment continuously in order to increase convenience and modernity for check-ins and respond to needs of customers and services users for their utmost satisfaction. For example, Pathumwan Princess Hotel renovated its 148 hotel rooms, with a budget of more than 120 million Baht.
Moreover, on 27th September 2019, Dusit Thani Krabi Beach Resort received “Thailand Tourism Awards” or “Kinnaree Awards” for the gold award in the accommodation sector as “Resort and Design Hotel” which reached quality standards on outstanding services. This prestigious award was given by Tourism Authority of Thailand (TAT) to establishments, communities and agencies which had participation in the development of Thai tourism.
The Golf Business. The Golf Business has provided 5 golf courses. Two golf courses are located in Phuket- The Loch Palm Golf Course (LPGC) and Red Mountain Golf Course (RMGC). Both courses are recognized as famous golf courses in Thailand by both Thai and foreign golfers. LPGC received various international awards such as IGOLF CHARTER an 8 Point Commitment for Environmental and Social Responsibility and Tripadvisor Certificate of Excellence (4 Stars), whil RMGC received international awards such as Asian Golf Award Monthly Best New Course in Asian, Hapa Best 5 in Asia Platinum Winner Hapa Golf Course of the Year, and Asian Golf Awards Best Course in Thailand (Top 10 List). The 3 additional golf courses located in Patumthani, are Riverdale Golf and Country Club (RDGC), Bangkok Golf Club (BKGC), and Lam Luk Ka Country Club (LLKGC). RDGC and BKGC are located within the same area, where BKGC provides both Day Golf and Night Golf services to enhance the convenience of service users in Bangkok and its vicinity. The golf courses have been regularly renovated and improved regarding fields and club houses in order to increase the service user satisfaction. The Group’s golf courses have also formed the business partnership with international leading golf courses. As a result, the Golf Business of MBK GROUP has a variety of choices and can well satisfy the customers’ needs.
The Real Estate Business. The Company has operated real estate development for sale, property management, property consultation and appraisal, led by experienced team with expertise in the real estate business. The Company has developed the residential project, “QUINN Sukhumvit 101”– which is the high-end condominium adjacent to Punnawithi BTS Station on Sukhumvit Road. The project’s value is over Baht 2,000 million. Currently, the project is under construction and is expected to be completed in 2020. Moreover, the QUARITZ RAMA 9 Project has been developed by the Real Estate Business. It is the residential project with the contemporary architecture on the potential location next to Rama 9 Road and near the Nine Center, schools and leading hospitals. It is designed in the style of modern and luxury houses amid nature. The project’s value is more than Baht 600 million and is expected to be available for sale in the 2nd quarter of 2020.
The residential project in Pathum Thani consists of the Park Riverdale project- which is designed to have gardens around the houses which makes residents live the closest to nature. The whole project is surrounded by greenery- and the Riverdale Residence project- which is in the style of “Elite Villa” project with a panoramic view over the Riverdale Golf Course. The both projects are worth over Baht 2,500 million.
The Food Resolution Business. The Company has operated the food resolution business, under Patum Rice Mill and Granary Public Company Limited (PRG). In 2019, quantities of rice decreased because of drought and the decreased domestic consumption of rice per person, while the consumption of other kinds of food increased. As a result, the pricing competition in Thailand’s domestic market was higher. However, PRG adapted the use of business strategies prudently and increased the flow of work to harmonize with economic situations by reducing inventory storage of rice (as a raw material) to be consistent with demand and supply situations, closely anticipating a tendency towards raw materials’ prices in order to control costs of procurement of raw materials, having measures to increase the efficiency of investment and expenses and closing some business down which did not produce returns.
For the Food Court and Services Business, under the current situation which the competition in providing services in the food court business is increasing. The Food Resolution Business has then adapted its business strategy by its brand image’s transformation from “MBK Food Island” into “Food Legend by MBK”. It was first introduced in the Samyan Mitrtown project in September 2019 with the name “Food Legends by MBK - Samyan Food Court”. It has gathered legendary restaurants from Samyan, Saphan Lueng (or the Yellow Bridge) and Yaowarat in this food court in the area of more than 1,275 square meters in order to provide services for more than 2,500 customers per day. Moreover, it has cooperated with Samyan Mitrtown and Lineman- its partner for orders for food on an online platform- to deliver legendary food through ordering food from several restaurants in Samyan Mitrtown within a single order and this served by the Lineman shoppers. Samyan Mitrtown is the 1st place where this service has been provided.
The Financial Business. It has conducted retail loans which have condominium units as collateral and business loans which are collateralized by value propertywhich is situated in a good location, has the potential for commercial development that matches MBK GROUP’s business, and is in the market’s demand- as well as business loans which listed securities in the Stock Exchange of Thailand (SET) as collateral. These collateralized securities have liquidity and value investment. It has been conducted by BMK Guarantee Co., Ltd. In 2019, the credit portfolio equaled Baht 8,225 million, or a growth rate as approximately 28% when compared with 2018.
The New Motorcycle Leasing Business-which provides the hire purchase of small, medium, and big motorcycles- has been conducted by T Leasing Co., Ltd. In 2019, the hire purchase portfolio size was Baht 7,288 million, or a growth rate as approximately 13% compared with 2018. Moreover, MBK Life Assurance Public Co., Ltd. has provided life insurance for both individuals and groups, offering the security for savings, life and health protection for individuals, institutions and organizations.
Moreover, TM Broker Co., Ltd. has conducted both life insurance and non-life insurance broker by providing services as life insurance and non-life insurance brokers. The operational results in 2019 was continuously growing and satisfactory.
The Other Business. It has been operated by Apple Auto Auction (Thailand) Co., Ltd. (AAA). The Company is engaged in the car auction, depository service and vehicle transportation-which all employ appraisal and vehicle inspection standards from Japan.
In 2019, AAA had more than 80,000 cars to be auctioned off. The growth rate increased, equaling 33%, compared with the previous year. AAA expanded its parking spaces upcountry in order to support an increase in cars entering the auction. Today, the Company has its parking spaces in 18 provinces nationwide. In 2020, the Company plans to open 5 more parking spaces, which will make AAA have parking spaces in 23 countries in total. Additionally, the Apple Auto Trade System was developed as a platform to trade cars in order to provide the complete services, while the Apple e-Bidding System was developed as a convenient auction platform for buyers and sellers to bid for the cars and/or other products anytime, anywhere. Moreover, in December 2019, the Company expanded its investment by buying additional ordinary shares. AAA previously had held 49.99% of shares, and this buying made it hold 53.55% of shares. Therefore, AAA has become a subsidiary of MBK.
The Corporate Supporting Center. The function of this important unit is to provide consultancy and support main business of the MBK GROUP. The Corporate Supporting Center places significance on its driven policy on human resources development which is the key foundation of stability and value added to the organization, through using technologies for the individual development in the organization in order to increase the potential and competence of MBK GROUP’s business by offering following support-For the Services, this center instills servicemindedness and service standards that are aligned with customers’ satisfaction. For the Processes, this center can help reduce working processes by the employment of technology and innovation by means of applications and systems- such as the MBK Application, Customer Relationship Management (CRM), e-Procurement, and AI (Artificial Intelligence)- in order to be used for the basic data analysis and customer behavior, including applications. For the Resources Sharing such as financial accounting, human resources, procurement, and information technology, this center can greatly enhance the competitive advantage and the utmost benefit. For the Personnel Development and Human Capital, this center stills the organizational culture and develop a human resources system, gearing them towards professionalism in order to increase the competitiveness for the sake of the organization’s steady growth.
For the Good Corporate Governance under the performance of the Board of Directors, executives and employees, the Company is determined to develop the organization and maintain standards of business operations continuously, as well as developing the competitiveness equipped with the efficient management in order to support the organization’s expansion and the growth in the future. The Company also adheres to Good Corporate Governance and anti-corruption according to international standards. Such success is reflected from the Corporate Governance score of “Excellent” (or 5 stars) the Company has received from the corporate governance assessment of listed companies for 4 consecutive years since 2016.
For the Responsibility to the society and the environment, the Company realizes and its emphasis on this responsibility. Then, it has created value in collaboration with “the society and business-involved parties” by utilizing expertise of the Company in order to create value to the organization and the society in tandem through various projects and activities continuously such as reduction of energy consumption, promotion of managing resources in appreciation, waste reduction form business processes, creative waste management, activities to provide knowledge for the communities and the instilment of employees’ awareness and consciousness of helping save the environment, cultivating the value and pride of organizing community volunteer activities as payback of their grateful feeling for the society and being part of the creation of the society of happiness. All lead to the social and environmental development for the sustainability in every aspect.
For early 2020, because of the Coronavirus disease or “COVID-19” pandemic which has spread over regions all around the world, several countries have implemented a measure that their citizens are prohibited from travelling to affected areas- including Thailand- leading to inbound quantities of travelers who have drastically decreased. Thai people then suffer anxiety, so they spend money less and travel less, which consequently affect every business sector. Therefore, the sluggish economic situations are harder hit by recession and severely have a direct impact on the Stock Exchange of Thailand (SET).
Therefore, the turnover in 2020 of MBK Public Co., Ltd. (MBK) and its subsidiaries (MBK GROUP) in every business group will be affected rather considerably. Also, the Company’s investments in available-for-sale marketable securities will reduce in value substantially. SET Index on 31stMarch 2020 decreased, late 2019, from 1,579.84 points to 1,125.86 points (a decrease of approximately 28.74%). However, the Board of Directors has confidence that the Company’s long-term stability and sustainability will be not affected.
On behalf of the Board of Directors, we would like to extend our appreciation to our shareholders, customers, traders and business alliances who have trust and support for business operations of MBK GROUP well so that MBK GROUP has continued its success. Also, we would like to express our gratitude to all our executives and employees who have united to overcome challenges with their hard work and dedication. MBK GROUP will adhere to conduct business conforming with the Good Corporate Governance and manage its business to its full potential, as well as developing and strengthening the organization for the sake of success and the growth path leading to sustainable future for the organization and every involved party.
Mr. Banterng Tantivit
Mr. Suphadej Poonpipat
Mr. Suvait Theeravachirakul