Coping with a crisis with top brands
The first non-financial institution, RMA Cambodia, has officially listed its corporate bonds on the Cambodia Securities Exchange (CSX) last week. RMA (Cambodia – RMAC), is fully guaranteed by a trust fund from the Asian Development Bank called the Credit Guarantee and Investment Facility (CGIF), and has been successfully and fully subscribed, with 800,000 bonds bought by three investors. RMA’s total issue amount is 80 billion riels – $20 million. The coupon rate for the RMAC is 5.5 percent per year with a maturity date of five years. The CSX now said it has 10 listed companies, five equity firms and five corporate bond firms with the total value collected from the capital market at $191 million. Last year, the amount of market capitalisation was $701 million, while the trading volume was $150,000 daily. Khmer Times’ Sok Chan, talked with Ngorn Saing, CEO of RMA (Cambodia) Plc, to discuss his business plan after listing on the CSX and its strategy to combat COVID-19.
KT: What is the operation of the RMA Cambodia right now? What does the RMA’s business portfolio have in Cambodia?
Saing: RMAC started its business in Cambodia in 1992. RMA Cambodia is a provider of equipment, services, and comprehensive solutions that respond to commercial and humanitarian needs. RMA Cambodia supplies and supports commercial enterprises that engage in automotive, infrastructure, agriculture machinery, warehouse solutions, financial solutions, car rental services, food franchise management and those including aid and development contractors, and we have the special products –handling materials such as cleaning equipment from homes to industry and roads. We also test gas, oil, electricity and water.
KT: How have these business portfolios contributed to the national economy?
Saing: If we take a look at the workforce, we have employed 3,000 jobs for Cambodian people so far. The business operations of each business and company in the country need supplies from us. For investors, we fulfill their needs. For instance, the construction sector, we have also supplied services and equipment to it.
KT: How do these businesses build trust with customers and investors?
Saing: The majority of our products are of international standards and are international brands. For Cambodia, all products we provide have full maintenance service and after-sales services.
We have many service centres. We have good products.
KT: You listed your company on the Cambodian Securities Exchange (CSX) on Thursday last week, why did you decide to issue corporate bonds?
Saing: RMAC is as always keen to support the efforts of the government of Cambodia in the country’s economic and financial development. In this case, we are pleased to be playing a part in the development of Cambodia’s bond market. The issuing of the corporate bond did not just start last week or last month: It took us more than two years. It was a long process. However, although we faced issues with the outbreak of COVID-19, we have not suspended our processes as we step forward.
First, we want to diversify the source of our capital. At present, we have many sources of funds from banks and from other financial institutions, but we do not have a source of funds from the capital market. Second, we also want to support the capital market in Cambodia to push this market to continue to grow. We believe that we will need additional working capital to expand our business in the future, so the capital market is a good choice.
Although there is a pandemic, we do not expect it will last long, it will end one day, so everything will be resumed soon.
We are the first non-financial institution corporate bond issuer and the first company to be supported by the CGIF. Before they supported us, they cuonducted due diligence and studied RMA’s business. They have criteria on the compliance of work, environment, business ethics, business plans and we submitted them.
KT: RMA has raised funds up to $20 million, what will you do with this working capital? Will you continue working with the CSX after three years listed on the capital market?
Saing: What is the most important thing is that our business is growing, so we need more working capital to expand our business, for example, expanding inventories. We need these funds for our working capital. We expect that we could issue equity in the CSX because we are finding opportunities to diversify our source of funds if everything works well. Plus, our brand is strong so we hope we can go forward.
KT: In which business segments do you see opportunities?
Saing: We always develop new products. We saw some opportunities in the agriculture sector.
I think right after COVID-19 ends, food security will be an issue, so I think agriculture will play a crucial role, so we are looking at what are the solutions to add to the agriculture sector to support farmers and investors. We are also looking at other opportunities: How to bring high quality and affordable products to support farmers and customers in Cambodia.
KT: How did the outbreak of Coronavirus affect your business?
Saing: We learnt that RMA has been affected by COVID-19. It is not only our companies, but other companies in the world. If we talk about the suppliers, they suspended their operations or found it difficult to transport finished products because of international lockdowns.
It affected our purchasing, orders, transport. Our customers postponed projects with us. Some needed finance from the bank, but the banks did not always approve loans. Some of our staff worked from home or efficiency in the job dropped. We cannot talk directly with customers, so efficiency also decreased, so we are affected just like other companies.
KT: What is your strategy to sustain the business during this difficult situation?
Saing: We are taking this opportunity to communicate with customers. We are trying to understand what their needs are, how we can support them. We always communicate with them, and train our staff. We also established a digital system for communication for such things as online meetings and sales. We have improved communications.
KT: What is your message?
Saing: Our business oversees some of Cambodia’s best-performing brands including Ford, the largest volume seller of new vehicles, the premium brand Jaguar Land Rover, John Deere the leading provider of agricultural equipment, Fuso the renowned truck brand, as well as material handling and construction equipment brands Fuso, TCM, JCB and JLG.
These bonds will provide a new source of liquidity to propel the company’s growth and market position in Cambodia. It is the time to get through the storm and thunder and we have to be well prepared to live in a hard-hit situation and continue our business when this situation ends.
credits to Khmer Times