BTS Group Holdings Public Company Limited (BTS.BK) Earnings Call Transcript & Summary

Good afternoon, analysts and fund managers, and welcome to BTS Group and BTSGIF Analyst Meeting for the second quarter of 2025/26 fiscal year. My name is [indiscernible] from BTS Group, and I will be your moderator during this presentation. We will begin with quarterly highlights of financial performance, business update and followed by Q&A session. Today, we are honored to welcome other the management team starting from Kun Daniel, CEO of BTS Group; Kun Chawadee, CFO of BTS Group; Kun Siriphen Fund Manager of BTSGIF; kun Soraya acting CEO and CFO of [ Rabbit Holdings ]. Along with other members of the management and IR teams. As a way, we welcome your feedback on today presentation. Please scan teh QR code that will be displayed at the end of the meeting to share your comments. [Operator Instructions] To start, I would like to hand over to Kun Daniel to recap on the financial performance for this quarter.

Thank you, [indiscernible], and once again, welcome to the quarterly results presentation. Kicking off with the business highlights, starting within MOVE. Once again, we received the subsidy for the yellow line. It's the third subsidy installment for the yellow line that we've received THB 2.5 billion, just to recall that we received THB 4.8 billion per year for both lines for the first 10 years of operation. On the 29th of September, the court ruling on the O&M case was in favor of BTSC, which ordered BMAT to pay THB 12.8 billion within 180 days. However, that's a moot point now because since then a subsequent event to the quarter end was that on the 30th of October, all of the O&M outstanding debt of THB 36.4 billion has now been fully settled. Also importantly, I think what is not mentioned here, there's also been a an MOU signed, if you like, that going forward that we expect the BMN to be paying us on time going forward. Within mix, not too many updates apart from VGI increased its shareholding in Plan B. So that is now up to 23.3%. VGI, as a result, has been classified as an investment -- reclassified its investment in Plan B as an associate company since the 24th of July. Advertising revenue has improved, which -- and it reached THB 492 million, which is up both year-on-year and Q-on-Q, and that was supported by the VGI and Plan B collaboration. Within MATCH a couple of updates. The first is on RABBIT and this is less impact to the group because it kind of eliminates on a consolidated basis, but we include it because RABBIT essentially divested shares in the company, which is the main asset was land at the Verso school. So in in line with RABBIT sort of strategy to continue divesting land and using those proceeds to reduce debt. ROCTEC continued its forward momentum in terms of revenue, which was a 5% year-on-year for the first half. And noticeably, its profit was up 58% year-on-year for the first half as well. Moving on to some of the financial highlights. On the profit and loss, directionally, you'll see an improving trend for all measures of revenue and profit now. Although the company did still generate a loss of $16 million, you see operating revenue was up 38% year-on-year to THB 5.8 billion, MATCH revenue up to THB 2.3 billion. Recurring EBITDA for the quarter now reached THB 3.7 billion, up 87% year-on-year and 35% Q-on-Q. And net profit, although small, it is positive at THB 102 million. That's attributable to the shareholders up 129% year-on-year. On the financial position, it remains very well managed. Cash and liquid investments of THB 36.7 billion, adjusted net D/E of 1.42x. These numbers, of course, don't yet reflect the repayment that I mentioned earlier, which was on the 30th of October. So those numbers are expected to improve further in the next quarter. On cash flow, we have adjusted cash flow from operations, a source of cash for the 6 months of THB 6.5 billion, cash flow used in investments of THB 13.3 billion. Now moving on to the now P&L snapshot for the second quarter. Total revenue reached THB 7.6 billion, up 41% from THB 5.4 billion. Operating revenue followed a similar trend up 48% to THB 5.8 billion. Again, the driver of those, as you can see in the chart in the bottom right-hand corner is the green -- the green column, which is entirely from MATCH following the consolidation of ROCTEC and RABBIT Holdings from both in November last year. Recurring EBITDA THB 3.7 billion, up 87%. Again, apart from these 2 factors there. One is the consolidation of RABBIT Holdings and ROCTEC, but there's also an improvement in MIX EBITDA which improved from a share of income investment from Plan B and [indiscernible]. So then we moved from our THB 3.7 billion recurring EBITDA down to a net profit of around THB 200 million. What's the difference? The difference is about THB 2 billion of finance costs, which is around THB 2 billion, up 24% year-on-year, tax of around THB 650 million, which is 36% year-on-year and depreciation and amortization, which is about THB 860 million, which is up significantly about 120%. So directionally, you can see versus Q1 that we moved from negative net profit to positive net profit, although they are still relatively small amounts. Margins, operating gross profit margin is about the same. Recurring EBITDA margin improved significantly to 64%. The net profit margin is still quite low at 3.8% and 1.3% respectively. Revenue breakdown, MATCH leading needing the way this quarter, 41% of revenue; MOVE at 40%; and MIX at 19%. On to the cash flow. This is a 6-month cash flow. Cash flow by about THB 12 billion during the 6 months. Operating cash flow, shown on the chart is around THB 1 billion, but that excludes the other, the THB 5.5 billion, which should have been paid and has now subsequently been paid. The key change is, we're running in investing cash flows, 2 key items to see acquisition of financial assets of THB 6.7 billion, basically the treasury team is just putting the cash to better use but also net cash paid for [indiscernible] and investment properties of THB 6.6 billion. Also, not mentioned on the slide, is THB 1 billion investment in Plan B. Financing cash flows are largely a wash. So significant on a 6-month basis. But it's mainly inflows from an increase in debt of around about THB 4.9 billion. So leverage has been ticking up but that's been offset by interest expenses of about THB 3.7 billion, leaving with the ending cash of THB 19.3 billion, including liquid investments of around THB 36.7 million. bar. And then over back to you, Sasi the MOVE update.

Thank you, Kun Daniel. So let's take a look at how MOVE, MIX, and MASH performed this further. Starting with MOVE business. Operating revenue was THB 230 billion, down 5% year-on-year and 14% Q-on-Q. The decline was mainly driven by the absence of [indiscernible] in transaction revenue. Following the completion of the pink line extension, which has been in operation since June. This was partially offset by Farebox revenue, which grew 11% year-on-year, supported by higher leadership on both the yellow and pink lines, which increased 15% on the yellow line and 14% on the pink line. O&M venue, we continue to grow steadily rising 5% year-on-year to about THB 1.9 billion. As shown in the bottom bar of the chart, on the other hand, the share of profit from BTSGIF declined to THB 79 million, down 29% year-on-year, mainly due to the amortization of fund investment. Moving on to the MIX business. Operating revenue came in at THB 1.1 billion, a decline of 14% year-on-year due to lower revenue across our business segments. Starting with advertising. Revenue was down 15% year-on-year, mainly because of lower street furniture revenue. This was partly offset by stronger performance in transit and office building media. Excluding street furniture, the utilization rate improved to 49% from 47% last year. Moving on to the digital services. Revenue fell 11% year-on-year, mainly due to lower insurance commission and reduced lead generation income from Rcare. However, this was partly offset by higher interest income, thanks to the increase in our cash outstanding loans. Lastly, distribution revenue dropped 15% year-on-year, mainly from Fanslink due to lower sales of other brand products. Lastly MATCH business. Revenue was THB 2.4 billion up over 1,200% year-on-year, mainly due to the consolidation of RABBIT and ROCTEC from last November. RABBIT contributed THB 1.4 billion, around THB 200 million from financial services and nearly THB 1.2 billion from real estate, mostly hotel operation in Thailand. And ROCTEC added almost THB 800 million, driven by strong demand for integrated technology solutions in both private and public projects in Hong Kong. Let's look at our financial position. As of the end of September 2025, total asset sales saw a slight increase, mainly driven by higher investment in JV and associate as well as an increase in PPE, investment properties and government receivables, this was partly offset by lower cash and cash equivalents. Liability also is up due to higher loans from financial institutions, partly offset by the banks early payments and equity fell almost 2%, mainly from noncontrolling interest. Finally, our adjusted net debt-to-equity improved to 1.4x from 2.4x last year with adjusted net debt at THB 148 billion. And this is all about the financial performance. Next, I would like to hand over to Kun [indiscernible] for business update.

Thank you, and good afternoon, everyone. I'm Kim from the BTSG IR team. In this slide, we would like to provide an update on our recent developments regarding the full settlement of the O&M debt. Last year in December, we received THB 14.5 billion from the first lawsuit, which has already been used for debt repayment. More recently, last month, we received THB 36.4 billion from the second lawsuit and the remaining O&M debt. Of this amount, THB 15 billion has been used for debt repayment and the remaining THB 21.4 billion are now at the bank deficit, ready for the cash requirement. With this substantial cash inflows, our liquidity has significantly strengthened. For this fiscal year-end, we are projecting our CFO of approximately THB 38 billion, mainly driven by the O&M debt repayment and also supported by the subsidy for the Pink and yellow lines for the first 10 years of operation as well as interest income from our investments. Moving forward, we are supposed to receive the O&M payments on schedule as shown in the chart below. The growing O&M fee will contribute to stable and predictable cash inflow for the company. Looking ahead to the next fiscal year, we project the CFO of THB 12 billion to THB 13 billion, mainly driven by the recurring O&M payment of THB 9 billion per chart below and again, subsidy for the pink and yellow lines. Next, move to the mix business update by [indiscernible].

Thank you, [indiscernible]. My name [indiscernible] for the region IR team, and I will present the MIX update, highlighting key developments during the second quarter of '25/'26. this quarter, we continue to see clearer from the ecosystem, strategy and our partnership with Plan B. In advertising, our main was integrating BTS Media with Plan B out-of-home mediawe introduced more bundle packages such as Bangkok On the Move and Bangkok Live, which combined our BTS and office building media with Plan B Bangkok [indiscernible] and in-store media at 7-Eleven. These packages allow us to reach customers throughout their daily journeys and help drive higher media utilization, supporting the ongoing growth in advertising revenues. Moving to digital services, Rabbit Card continued to perform strongly with limited edition campaign, driving engagement and increasing touch points with BTS passengers. At BTS care. We sold around 47,000 interim polices during this quarter and [indiscernible] product portfolio to support recurring commission revenue. We also expanded our footprint with a new Chiang Mai, which serve as a key operational hub to enhance IKS national business capacity, operational efficiency and cost management. Rabbit cash remain a key engine of growth. Its loan portfolio grows to THB 1.2 billion, increasing 34% year-on-year and 10% Q-on-Q, with the portfolio mix of 65% annual loan and 35% wealth allowance. The company also plans to continue expanding its loan size while striving to minimize NPL as much as possible. Turning to distribution. Turtle now raised 28 shops across the BTS green line and at yellow line and selected off network locations. Leasing occupancy improved to 62.4% from 61.6% year-on-year. We also enhanced our product to key initiatives such as Turtle Club Plus [indiscernible] the launch of the new SuperRich Turtle brand at BTS Asok. In addition, turtle continues to roll out various sustainability activities. Altogether, [indiscernible] strengthen the customer experience and drive traffic across Turtle Shop. Within Fanslink, we are in the process of shifting the portfolio to higher margin owned bands and other brands, while reducing sales of lower-margin products. This has improved our gross margin and support profitability for the distribution business. Lastly, regarding guidance. Considering the softer macroeconomy and more conservative assumptions for advertising and retail spending, we have revised our full year revenue guidance from THB 6 billion to THB 5.5 billion. We also reduced our CapEx guidance from THB 1 billion to THB 500 million, reflecting a more discipline and selective investment efforts, prioritizing project strengthening our ecosystem and long-term shareholder value. This conclude the MIX update. And I will now hand it back to [indiscernible] for RABBIT update.