Ticon Industrial Connection Plc was established in 1990 to fill a need in the market for ready-built factories for lease. Ticon’s factories and warehouses are located in major industrial estates and in key areas in Thailand. Managing director Virapan Pulges discusses the company’s strategy and outlook.
Please explain Ticon’s business model.
Ticon has two main businesses _ developing factories and warehouses for rent. The warehouses for rent are operated under Ticon Logistics Park Co Ltd (TPARK). We try to be a one-stop service to our customers by offering multiple choices of location and our expertise on which location suits their industry best. For factories we are located within 15 industrial estates, and for warehouses and distribution centres we have 28 locations, both inside and outside industrial estates in locations that are connected to major highways, railway lines and so forth. We offer factories ranging from 1,200 to 10,000 square metres and warehouses from 1,200 to 25,000 sq m but are also able to provide custom-built facilities should a customer require it.
Who are Ticon’s customers by nationality and industry?
For factories our tenants are mostly Japanese, the remainder including European, Thai, Singaporean and North American. They are mainly in the electronics and automotive industries but we also have companies involved in agricultural machinery and the food industry. Our warehouse tenants are similar in that they are mainly Japanese but also include Thai, North American and European nations. However, the industries differ in that there are general logistics companies as well as those involved in automotives, electronics, consumer products and retail.
Ticon is about to launch TGROWTH. Could you please provide more information on this?
The Ticon Industrial Growth Leasehold Property Fund or TGROWTH will invest in land rental rights and/or ownership of 38 units of Ticon factories and 50 units of TPARK warehouses for 30 years, worth approximately 6 billion baht. The investment will be conducted in two phases with the first phase executed through the IPO process where 38 factories and 50 warehouses will be acquired by the fund. For the second phase the fund will invest in two factories inside Amata City Industrial Estate.
The factories have a total area of approximately 121,175 square metres and the warehouses 182,095 sq m. Most of the tenants are leading international companies engaged in high growth potential industries such as automotives, consumer products and electronics.
We can ensure stable recurring income since the fund provides investors with the opportunity to invest in international quality, ready-built factories and warehouses for lease. With the funds Ticon expects to raise via the sale to TGROWTH we will be able to further invest in new factories, warehouses and logistics parks in order to ensure we can serve our customers’ demands.
Would Ticon consider expanding outside of Thailand?
We have been exploring throughout the region in countries such as Indonesia, Vietnam and Myanmar. However each country has its own local regulatory authorities through which we would need local partners in order to do business. In Indonesia we see a market with great potential but greater investment in infrastructure is still needed before its potential can be fully realised.
Vietnam is also interesting. However there are still uncertainties regarding land prices, interest, inflation and thus currency issues. Finally in Myanmar, development will still take some time.
So we have explored the region but still find Thailand to be the best location in the region for our business because of the country’s infrastructure, and in particular its roads, electricity and water are all conducive to companies setting up and utilising Thailand as a base for their business.
What are the biggest risks facing your business?
In the past five years we have experienced every major risk possible from floods to an airport shutdown to the global crisis, and yet our company has still performed well and Thailand is still an attractive location for companies to invest. Politics poses a minor risk in terms of business but customers are still coming. However, it may affect us slightly in terms of timing for selling assets to our property fund and the yield we offer investors.
What impact will the Asean Economic Community have on your business?
The AEC will affect our customers first and us secondly. For example, Japanese companies are our largest customers. They are expanding in the automotive sector and aim to use Thailand as a manufacturing hub for the region. As a function of this we will see higher demand for factories, warehouses and logistics parks. So the AEC will benefit Ticon in that Thailand is an attractive location for industries and ideal geographically for the Asean region. We aim to maintain our reputation as a viable option for any company looking to invest or expand within Thailand.
Where do you see Ticon in five years from now?
Five years from now Ticon aims to be a regional player with operations throughout Asean. In the meantime, we will continue to expand our foothold in Thailand and operate our own REITs in the future as well.
Source: Bangkok Post