Founded in December 1988, Jay Mart Plc (JMART) began as a seller of electrical appliances with installment financing. It later expanded into wholesaling televisions, VCRs and air-conditioners. Today its flagship business is retailing and wholesaling mobile phones and accessories under all major brands. Its subsidiaries include JMT, a debt-collection business, and IT Junction, which sublets space to mobile phone retailers. CEO Adisak Sukumvitaya discusses the company’s strategy and outlook.
Our main risk is not achieving our potential, says Mr Adisak.
Please explain Jay Mart’s business model.
Jay Mart has three main businesses: retail mobile phone distribution, rental, and collection. Retail accounts for 90% of our revenue and 60% of gross profits, rental 4% and 4%, and collection 5% of revenues and 18% of gross profits. The rental and collection businesses make our business model different from that of our competitors.
We have more than 200 shops and plan to expand and renovate existing locations. For the rental business, we set up IT Junction with Big C in 27 locations, renting space to dealers who sell mobile phones, Sim cards and accessories. Thus with the combination of both retail and rental locations, we are able to reach a wide range of consumers in all income groups. This year the continuing trend of smartphone adoption has benefited us with higher average selling prices and higher margins.
For the collection business, we are managing 30 billion baht, some of it outsourced to us from other firms and 65% of which we bought ourselves. We have been operating each of these businesses for 15 years so we have developed very strong teams that can manage each business very well.
Why is Jay Mart successful at the mobile retail business?
It’s a combination of successful shop aesthetics, inventory management and cash management. We have been expanding nationwide and renovating our existing shops to provide a new look, live demos and easier viewing of each product. After we renovate each store we have experienced an increase in turnover by 30%, and for the first time we achieved one million baht in sales in a shop at The Mall Bang Kapi. We have multi-brand shops as well as single-brand shops for Samsung and BlackBerry. Inventory management is also a key as we have improved our inventory days turnover from 50 days in 2007 to 33 in the first quarter of 2012. We monitor our inventory on a daily basis because this is a fast-moving consumer good with models coming out often.
JMT has been growing strongly. What are Jay Mart’s plans for this business segment?
We are looking to list JMT later this year on the Stock Exchange of Thailand. Its portfolio size is 30 billion baht and we need capital in order to expand this business further. We first purchased debt six years ago, utilising 39 million baht to purchase 1 billion baht worth of accounts and to date we have collected 118 million of that portion. All told, we have purchased 20 billion baht worth of accounts for 793 million and have already collected one billion. These debts can last for 30 years and longer if extended by the courts. What separates us from competitors is that we know how to deal with debtors. We try to help people by offering a discount on their debt today and assist them to ensure that their personal credit ratings are clean.
Is Jay Mart looking at other ventures to complement its current businesses?
Yes, within JMT we have begun to expand to leasing second-hand cars with an age of 6-7 years. We started on a small scale with 20-30 million baht more than a year ago and feel there is strong growth potential in this segment as the competition is minimal. Also we have set up a new company called JAS Assets to create J Markets. Thailand and Thai people are connected to local markets where they can buy meals, coffee, local items, groceries and so forth. Where markets today are unorganised and messy, we want to create clean, bright, open-air spaces with a variety of products for the low- to middle-income consumer segment. This is simply an extension of our current capabilities of managing retail spaces.
Our first launch will be Talad Amornpan at Kasetsart University, which is 2,000 square metres with 1,000 to 2,000 tenants to whom we only charge rent. Our long-term aim is for J Market to be a recognised name, i.e. J Market Amornpan, J Market Wang Hin, J Market Hua Hin and so forth. We understand there will be several challenges at first, but we have learned to be patient if we want to be successful in any endeavour that Jay Mart ventures into.
Jay Mart’s financial performance has been impressive. What can investors expect going forward?
In the first quarter of 2012 our net profit grew 102% year-on-year and we expect our business to continue growing at a strong growth rate for the next few years.
What are the biggest risks facing your business today?
Today we are in a good position. We have a staff of more than 1,300 people that I trust and listen to. Our main risk is not achieving our potential. We have to be careful in doing new projects and monitor the risks carefully to ensure that Jay Mart can continue to be a stable and growing company.
What impact will the Asean Economic Community have on your business?
I view this as an opportunity. We are already selling handsets to Laos and Cambodia, and have already begun talking with Big C Vietnam for expansion there, and we are impressed with the potential of Myanmar over the long term. Thus for Jay Mart this is an opportunity to expand further regionally.
Where do you expect to see Jay Mart in five years from now?
I believe that we are only at a third of where we want to be as a company. I want Jay Mart to be No.1 in any business in which it operates, in mobile phone retailing, collection, rental and the two new endeavours we are expanding into. Thus we will be looking to use our company’s strengths and platform to continue strengthening our position.
The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company and the largest investor relations network in the region, with more than 400 listed clients. This interview was conducted by Pon Van Compernolle, editor of www.thaicapitalist.com
Originally published in the Bangkok Post 03.08.12