The most popular massage and spa chain in Thailand are looking to expand its presence in China to bring its services closer to its largest client group.
Siam Wellness Group Pcl is in talks with potential partners to operate its licensed "Let's Relax" shops in cithe ties in the most populous country in the world, President Wiboon Utsahajit said, without specifying the number of outlets planned.
Expansion in China, where the firm now has just one source, underpins the achievement of the company's annual earnings growth goal of over 20 percent, he said.
Siam Wellness follows Thai firms including Carabao Group Pcl and Taokaenoi Food & Marketing Pcl in trying to harness the success of the Southeast Asian nation directly in their home country.
Chinese tourists and investors have been wooed by the government of Prime Minister Prayuth Chan-Ocha to stimulate the ecthe onomy as the trade dispute between China and U.S. drags on.
"We have done a very careful study and now have the confidence to expand in mainland China," said Wiboon in a Friday interview. "For most foreign players, China is a very tough market, but it's worth the risk."
The baht's appreciation of more than 7 percent against the U.S. dollar in the past year has contributed to a slowdown in the tourism industry of Thailand. Earlier this year, Chinese arrivals saw a moderate decrease, although recent reports show a revival in visitors.
"In the coming years, the profits of Siam Wellness are expected to hit new highs," said Nantika Wiangphoem, an analyst at DBS Vickers Securities (Thailand) Co. However, risks to this outlook include the possibility of a slump in Thailand's foreign tourist arrivals,the a global economic slowdown, and increased competition, she added.
About one third of Siam Wellness' 3,000 daily customers are foreigners and, according to Wiboon, most of them come from China. The Chinese expansion will be operating with local partners under franchise agreements, he said. The business now has 62 branches in countries like Myanmar and Cambodia, and six outlets overseas.
This year, despite losing nearly 50 percent of its value in 2018, the stocks have earned 39 percent, currently valuing the business at $294 million, relative to the estimated $76,000 spent by Wiboon to build the company 20 years ago.
Siam Wellness is the second largest company by market value in the Alternative Investment industry, the Thai company's stock bourse for 161 small- and medium-sized group of firms.
