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

[Foreign Language]

Thanks [indiscernible]. Good afternoon, everyone, and welcome once again to the analyst conference for the third quarter this year. We'll start off with a review of some of the sustainability recognition that the group has received once again. Since the last quarter, we were very proud to have been included in the S&P Global Yearbook and the only company within the transportation and transportation infrastructure sector to be awarded a Gold Class following up also on the leading position given by DJSI. There are some other domestic and international recognition here. I won't go through them all, but needless to say that BTS Group continues to emphasize the importance of sustainability within its business model. If we now switch over on to the quarterly results. Some of the highlights, starting with the P&L. Operating revenue, THB 8.8 billion, down 2% Q-on-Q or down 15% year-on-year. Recurring EBITDA THB 2.7 billion, down 28% year-on-year and up 33% Q-on-Q and net profit of THB 1.7 billion, down 32% year-on-year and up 120% Q-on-Q. You see a clear pattern there in terms of the year-on-year numbers are still quite down between 15% to 30%, but the Q-on-Q numbers turning to positive, showing -- demonstrating that the momentum and the recovery is turning in our favor. On the financial position, our balance sheet remains strong. Cash and liquid investments of THB 20.1 billion. Indeed, that's stronger, significantly stronger than 3 months ago when it was at THB 12.3 billion. And low leverage reflected with an adjusted net debt-to-equity of 1.21. And again, once -- that's down from a high leverage of 1.31 last quarter. So a stronger Q-on-Q position on the balance sheet also. In terms of the cash flow, it's a similar pattern really that we've seen for several years now where we've been talking about increased leveraging, financing the investment in our Mass Transit and the transportation expansion. There's no difference that for this 9 months, you see increase in long-term loans and debenture of about THB 19 billion, investing in Pink, Yellow and Green Lines of about THB 18 billion. One difference that we have seen in the last 9 months, however, is that we've raised cash from the sale of land and also a stake in VGI in the amount of almost THB 13 billion, showing our ability to tap in on some long-term assets and investments that we've made over the years at times of need. On to the P&L summary on the next page. Operating revenue, as I mentioned, THB 8.7 billion, down 2% Q-on-Q, but down 15% year-on-year. The year-on-year numbers there, you can see in the bottom right-hand corner in the chart, the key contributor to the downturn year-on-year is THB 1.1 billion from the Media business. As you know, that business is much more exposed to the cyclicality and the consumption weakness. Mass Transit, if you can see it, actually pretty much flat year-on-year, showing a very good strength there as a result of not relying on ticket revenue, but actually getting most of the revenue from operating income and development income. Recurring EBITDA was 28% down year-on-year to THB 2.6 billion, but up 33% Q-on-Q to THB 2.0 billion. Net income, THB 1.68 billion, down 32% year-over-year and up 120% Q-on-Q. The margins for this quarter, 18% for operating profit margin, EBITDA, 30% and net profit margin, 18%. All of those up compared to the previous quarter as a result of that recovery in the business that we mentioned. For the third quarter, our operating revenue breakdown is at Mass Transit 89% and Media at 8%. Switching over to the cash flow statement. We started with a THB 3 billion cash balance at the start of the year and ended up with a THB 5 billion cash on the 31st of December, so a slight improvement there. What's happened in between? Well, CFO has represented a drain of cash of around about THB 15.7 billion. Adding to that, cash flow from investing is also draining cash of THB 6.4 billion. The key contributors are investments in the Pink and Yellow Lines of THB 9 billion. There were also about THB 8 billion worth of investments in subsidiaries, associates and joint ventures, but mainly for the Mo Chit Land acquisition as well as investments in Kerry Express, U-Tapao and the motorway project. Offsetting that was cash received from our sale of investments. It was actually from essentially a land sale, which is the Bayswater land in the first quarter of this year as well as net cash received from sale of investment in financial assets of around THB 3.4 billion. So where did we fund that shortfall from in the financing cash flow, to see a THB 24 billion use -- cash provided primarily from leverage, essentially, THB 20 billion is from leverage, about THB 15.7 billion is from long-term loans related to the Pink and Yellow line, but there was also an THB 8.6 billion issuance of green bonds, so net THB 3.6 billion debenture issuance this year. And then in addition to that, as I mentioned earlier, we received cash from investments in subsidiaries from the sale of investments in subsidiaries, THB 8.1 billion, mainly from the sale of VGI shares and the company was to continue to be able to pay a dividend payment of THB 3.9 billion in May and August 2020. So this obviously doesn't include the dividend payment paid in February, leaving with us a cash balance of THB 5 billion. And if you add the liquid investments, that would take us to a healthy position of around THB 20 billion cash and liquid investments. Now for the segmental portion, I'll hand over to [ Jane ].

Thank you, Khun Daniel, and good afternoon, everyone. For segmental performance, we will start with the Mass Transit business on Page 8. In the third quarter of fiscal year 2020/20 (sic) [ 2020/21 ], we recorded total Mass Transit revenue of THB 7.8 billion, remained stable year-on-year, and the bar chart on the bottom left-hand side shows that 81% of total Mass Transit revenue was from revenue from development of new lines of THB 6.3 billion comprising of THB 5.1 billion from construction revenue for the Pink and Yellow Lines, which decreased by THB 0.5 billion year-on-year and another THB 1.3 billion was from services income for the provision of E&M works and the train procurement service for Green Line extensions, which declined by THB 0.9 billion year-on-year as we enter in the current stage of development. O&M revenue accounted for 17% of total Mass Transit revenue or THB 1.3 billion. This represents a growth of 42% or THB 392 million from last year. This was mainly due to the full operation of the Northern Green Line extension in December 2020. And on the cost side, Mass Transit cost also fell by 4% or THB 297 million to THB 6.6 billion from lower recognition of services costs for the provision of E&M works and the train procurement service for the Green Line extensions. And during this quarter, we recognized an increase in Mass Transit-related interest income of 11% or THB 72 million year-on-year to THB 718 million. This was largely on account of interest income from receivables related to the Pink and Yellow Lines. And share of profit from investment in BTSGIF for this quarter stood at THB 130 million, declining by 37% or THB 77 million from last year following the impact from the COVID-19 pandemic. Recurring EBITDA for Mass Transit business -- recurring EBITDA margin for Mass Transit business increased to 26.7% from 22.8% in the previous year due to higher O&M recognition as well as higher Mass Transit-related interest income. Now moving on to the Media business. Media revenue in this quarter was THB 674 million, decreasing by 63% year-on-year, mainly due to the deconsolidation of MACO as well as the impact from the COVID-19 pandemic. Out-of-Home Media accounted for 68% of total Media revenue or THB 458 million, dropping by 62% or THB 747 million, largely due to the deconsolidation of MACO and also the impact from the pandemic. While Digital Services business contributed 32% of total Media revenue or THB 216 million. This was mainly from a decline in project management revenue as well as the online advertising following the low demand on advertising and marketing spending. And on the cost side, Media cost stood at THB 300 million, dropping by 63% year-on-year or THB 508 million. And the last one is the Property business. Total Property revenue in the third quarter stood at THB 57 million, a decrease of 50% or THB 56 million from last year, chiefly from lower commercial revenues and property costs also decreased by 11% or THB 10 million to THB 79 million. And in the third quarter of this fiscal year, we recognized share of loss from investment in U City of THB 1,289 million compared to a share of profit of THB 1,279 million in the previous year, mainly from: first, the recognition of U City's impairment assets of THB 1,429 million; second, no repeat recognition of the gain of THB 1,118 million from the sale of Mo Chit Land in the third quarter of fiscal year 2019/'20; third, the decrease in revenue from total operations as a result of the impact of COVID-19 pandemic, being partially offset by a gain from U City's disposal of all ordinary shares in 9 joint ventures to Sansiri in November 2020. Now moving on to the financial position. As of 31st of December 2020, our total assets stood at THB 206 billion, increasing by THB 33 billion or 19% from 31st of March 2020. The increase was mainly from an increase in other financial assets and right-of-use of assets of THB 25 billion from the adoption of TFRS 9 and TFRS 16, an increase in receivables related to mass transit projects of THB 26.4 billion, an increase in investment properties of THB 4.7 billion, mainly from the acquisition of Mo Chit Land in October 2020 as well as higher cash and cash equivalents of THB 1.8 billion. But the increase was partly offset by a decrease in current investments in derivative instruments and other long-term investments of THB 20.7 billion from the adoption of TFRS 9, lower trade and other receivables of THB 3.7 billion, largely from receiving the last installment on the sales of Mo Chit Land as well as a decrease in advance to contractors and for acquisitions of assets of THB 1.1 billion. Total liabilities stood at THB 133 billion, increasing by 26% or THB 27 billion from 31st of March 2020. This was mainly from an increase in long-term loans from financial institutions of THB 15.6 billion due to the drawdown of syndicated loans in relation to the Pink and Yellow Lines, an increase in other financial liabilities and lease liabilities of THB 7 billion from the adoption of TFRS 9 and TFRS 16 as well as an increase in net long-term debentures of THB 3.5 billion due to the newly issued THB 8.6 billion green bond by BTS Group in November 2020, partially offset by the partial repayment of THB 5.1 billion from the first tranche of THB 9.5 billion debenture and THB 7 billion debenture. But the increase was partly offset by a decrease in trade and other payables of THB 1.2 billion. While total equity as of 31st of December stood at THB 73 billion, increasing by 8% or THB 5.8 billion, mainly from an increase in surplus from the changes in the ownership interest in subsidiaries of THB 4.5 billion and a controlling interest in subsidiaries of THB 2.7 billion, mainly as a result of the decline in our shareholding in VGI. However, the increase was partially offset by a decrease in retained earnings of THB 1.4 billion, mainly from the special dividend payment in May 2020 and also final dividend payment in August 2020. And our leverage position remain low adjusted net debt of 1.21x from adjusted net debt of THB 88 billion in this quarter. So now I will hand over to Khun Pornprasert for business update.

Thank you, Khun Sataporn. Good afternoon, analysts and fund managers. For the business update, I would like to start with our latest transaction in December last year. Following the sale of 3 land plots in Thana City to the joint venture company, which comprised of Saha Pathana Inter-Holding with 41% shareholding, Noble Development, 40% shareholding and BTS Group with 19% shareholding. The company recorded net gain of THB 1.6 million. The main objective of this transaction is to increase cash and liquidity of the company during this challenging situation. Next on Mass Transit update. In December last year as well, the remaining 7 of 16 stations of Northern Green Line has begun the operation. So our total network, total of Green Line network already cover 60 stations and 67 kilometers, including the Saint Louis station, we just began the operation earlier this month. Moreover, the Gold Line Phase 1 also began the operation in December last year as well. And next for the Pink and Yellow Lines. The construction of both lines are underway with around 70% completed, and we expect some station to open later this year, and the full operation is targeted in 2022. And we have the good news on 9 of this month, February 2021, the cabinet has approved the extension of the Pink Line monorail, a distance of 3 kilometers. The Pink Line extension will be from Si Rat station to Muang Thong Thani's area, and you have 2 station, MT-01 and MT-02. The construction of this extension is targeted to take over 3 years, to complete in 2024. And these are the update on Mass Transit. So I will hand over to Khun Waritha for Media update.