Minor International Public Company Limited (MINT) Earnings Call Transcript & Summary

Hi. Good morning, apology, again. But today agenda, I'm going to go start off very quickly. In terms of third quarter 2020 in review, which is results recap. And then Jutatip will talk about in detail the business development or ease in development that we had at Minor Hotels, Minor Food and Minor Lifestyle. And I will wrap up with corporate information, together with our strategies and plan to respond to COVID situation, both immediate and long-term strategies. So let's start off with the third quarter results recap. Before we go into the number, I want to highlight some of the key positive development that we have. In the third quarter, the magnitude of core losses has sequentially come down significantly quarter-on-quarter when you compare with second quarter. On the back of our resumption of our businesses, we start to open our hotels, our restaurant and lifestyle outlets. And then at Minor Food, Minor Foods start to turn profitable at NPAT level in the third quarter. Actually, every month throughout the third quarter, Minor Food reported NPAT -- positive NPAT, with all the hubs, Thailand, Australia, Singapore, reporting positive NPAT, which is quite an encouraging sign. For Minor Hotels, even though the business unit still report bottom line losses, but if you look at EBITDA trend -- EBITDA, it trends positively, with monthly EBITDA post TFRS turning positive in September. This EBITDA post TFRS is comparable to gross operating profit or cash flow before rent. So it turned positive already in September, and that's sufficient enough to make the whole third quarter EBITDA post-TFRS for the group turn positive in the quarter as well. Particularly, if you look at our European operation, gross operating profit of our NH also turned positive too in the third quarter. Elsewhere in Minor Hotels, we saw Australia and mixed-use businesses demonstrated a strong recovery. Both Australia and mixed-use show positive EBITDA, both at the pre and post TFRS basis in the third quarter of the year. Also, our Maldives portfolio, which has opened in late third quarter, showing good sign and good traction since the reopening in September with our own hotel and Anantara Kihavah boasting a very high occupancy of almost 70% in November to date. So those are the development at the BU at the corporate level. And then across all BUs, we have done a lot of cost reduction and leading to a decline in cash burn. If you look at -- if you remember, last quarter, we indicated that our cost reduction and cost saving will be around 30% of the budget. But since we have implemented cost-cutting measures up until today, we have done so much more. And our latest forecast for the full year cost reduction now is almost 40% compared with the original indicated target of 30% we shared earlier. So a positive development in terms of cost-cutting right there. And to highlight the rent lease at our European operation of our NH. NH negotiation with landlords on rent reduction has progressed really well, with the latest savings goal identified at around EUR 90 million for the full year. And if you look at MINT overall, the monthly cash burn, which we'll show in detail later, nearly half from what it was in the previous quarter. So average cash burn of THB 2.9 billion per month in the second quarter has come down to about THB 1.5 billion per month in the third quarter. Lastly, the -- our ongoing balance sheet management, we have successfully executed our capital strength -- strengthening plan in July, which brought in capital in the form of RO and perpetual bonds. So our liquidity now remains ample with THB 30 billion in cash on hand as well as THB 25 billion unutilized credit facilities. We also prepare for -- on other alternative balance sheet management plans, which we think that we're ready to execute it if needed. This is all dependent upon the evolution of the pandemic situation. So this backup plan include the extension of debt covenant waiver as well as our asset rotation strategy, which we will talk about in subsequent slides. And lastly, you're probably well aware that the news that came out this week. It was announced this week that the world's first effective coronavirus vaccine has shown positive results in preliminary tests. Apart from one, there are other that come up with vaccine, and that's also encouraging news, which can change the landscape and outlook of the hotel sector, including the outlook of our performance going forward as well. Moving on to next slide. The third quarter recap -- performance recap. I'm going to start off with year-on-year performance first. I'd go without saying with the effect of the pandemic, we saw revenue coming down year-on-year, on a core basis, revenue come down by 50% year-on-year to about THB 15 billion in the third quarter. In terms of profit, the bottom line, we recorded profit of THB 1.4 billion on a core basis last year in the third quarter of '19. But this year, we made losses of THB 4.4 billion on a core pre-TFRS basis, primarily a result of Minor Hotels and Minor Lifestyle, while Minor Food, like I said before, reported net profit during the quarter, even with the improvement year-on-year and with aggressive cost reduction. If you look at the lower right-hand chart that we show, net losses improved month-on-month during the quarter. So moving on to third quarter results recap. On a quarter-on-quarter basis, you can see that the -- we see sequential improvement quarter-on-quarter on the back of our business reopening as well as our drastic cost-cutting measures that we made. So on a core basis, losses that we made of THB 6.9 billion in the second quarter of this year, has come down significantly to about THB 4.4 billion in third quarter of this year as a result. This slide is just to show you the -- our footprint, we operate across the globe in 63 countries, and our revenue contributions, about 64% coming from overseas, while remainder coming from Thailand in the first 9 months of the year. From here on, we're going to talk a little bit more of business development, recent development in each BU. I'll hand it over to Jutatip.

We'll start off with Minor Hotels. For Minor Hotels, as Khun Chaiyapat said earlier, so in terms of the performance, of course, if you look at year-on-year, the numbers declined because of the COVID-19 situation. But if you look at Q-on-Q numbers, it actually improved quite significantly if you compare it to last year. So in the third quarter of 2020, revenue declined by about 62% year-on-year. But if you look at Q-on-Q, it's actually quadrupled with improvement across the different business models, whether it's owned or leased, management letting rights or managed hotels and mixed-use business. And in terms of geography, Thailand, Europe and Austria and New Zealand actually has seen improvement compared to the second quarter. If you look at EBITDA and net profit, it actually showed significant improvement trend quarter-on-quarter with -- to highlight EBITDA of Australia and New Zealand and also the mixed-use business turning positive already. And if you look at the losses overall, NH continued to be the biggest contribution, and it accounted for over 70% of the losses in the third quarter. In terms of contribution, international continues to be the majority of the contribution of revenue, about 88% first 9 months of the year, and we're now operating in 55 countries for Minor Hotels. Just a reminder, in terms of portfolio, owned and lease business model continues to the biggest part of the contribution. And in terms of geography, it's Europe, followed by Thailand and Australia and New Zealand. Maldives, because it continues to be closed pretty much throughout the third quarter, in terms of contribution in the third quarter, it hasn't really contributed anything in the third quarter. Going into each business model, starting off with owned and leased hotels, in terms of number of rooms, we actually increased the number of rooms by about 3% in the third quarter compared to last year, and that's primarily because of the addition of the Boscolo portfolio in Europe. This is actually something that we've committed earlier in the year. If you remember, we actually announced the lease of the Covivio portfolio, which used to be under the Boscolo portfolio in Europe. It's a luxury portfolio that we just closed in about September of this year. So the numbers actually just come in, in the third quarter in terms of the number of rooms. If you look at the RevPar performance, it's actually down by about 69% and that's improvement compared to a decline of 95% in the second quarter. And if you look at the monthly trend at the graphs down at the bottom, we've actually started to see improvement of RevPar in June, July and August as we reopened the hotels. But in September and October, we started to see a slight decline in RevPar again, and of course, that's primarily because of the second wave in Europe. But if you look at the situation now, it's actually starting to get better in Europe, especially in Germany and also in Spain. So hopefully, we'll start to see the stats turning around, again, going into November and December of this year. But if you look at the third quarter, in terms of the revenue of only leased hotels because of the continued decline in RevPar, we actually saw a decline of about 65% of revenue year-on-year. That almost quadrupled if you compare it to last quarter. If we break the owned and leased hotels into different geographies. In Thailand, of course, we're seeing the same trend, down year-on-year, but improving significantly quarter-on-quarter. And we continue to see kind of like stable trend of improvement in Thailand, and that's primarily the domestic market for our hotels in the provinces. And for the hotels in Bangkok, the improvement was primarily from the ASQ or the alternative state quarantine business. So we're one of the first hotels to actually started doing the ASQ here in Thailand. For the Maldives, as I said earlier, we continue to close the hotels pretty much until almost the end of September. So that means the RevPar was down by 100%. But we started to open the hotels at the end of September, and we started to see very good traction. So if you look at in terms of RevPar, it already improved quite significantly going into October. And going into November, in terms of occupancy, we're running at almost 70% for the Kihavah Hotel, which is a flagship hotel in the Maldives. Going into Europe and the Americas, of course, the trend is the same, down year-on-year, but significant improvement quarter-on-quarter. And if you look at in terms of geography in Latin America or the Americas is actually the geography that we've actually seen the weakest performance in terms of RevPar. And that's, of course, because of the COVID-19 situation there, so many of the hotels continue to be closed. And in terms of monthly trend, as I mentioned earlier, seeing better trend from May up until August and then slightly declining because of the second wave of the COVID-19 in Europe. For asset-light business model, the management letting rights or our hotels in Australia relatively performed better compared to other parts of our portfolio. So the RevPar has improved gradually pretty much month-on-month, pretty much the same for the management hotels as well. So as I mentioned earlier, so Rev -- EBITDA of Australia has already turned positive in the third quarter. So that's the highlight of the overall portfolio as of today. For hotel expansion pipeline, I think the pipeline is pretty much the same as before. So we haven't really dropped any of the hotels in the pipeline. But what's happened is that we -- some of the hotels have been shifted -- postponed in terms of openings. But the pipeline overall continues to be pretty much similar to what we've disclosed earlier. So as we continue to reevaluate our overall portfolio, as we continue to talk to our -- the property owners on the openings, we'll keep updating the investors on the time line of openings every quarter. For the mixed-use business, so as I mentioned earlier, we've actually seen some residential sales activities in the third quarter, which has actually helped our revenue and also our bottom line. And for the Anantara Vacation Club, we have also seen improvement in terms of profitability as well. So we've actually seen some cost savings coming through. So -- because of that, the EBITDA of the mixed-use business turned positive in the third quarter of the year. Going into Minor Food. So for Minor Food, revenue declined slightly, but I would say that in terms of performance, it's actually pretty much back to pre-COVID level. So in terms of net profit, we're pretty much back to the third quarter of last year level already. So if you look at in terms of same-store sales, we're still seeing a slight decline, but I would say pretty much stable now. And the majority or the driver of the third quarter has been China hub and also the cost reductions, which resulted in pretty much positive net profit across the 3 key hubs that we have. And because of the cost savings, again, in terms of profitability, we're also seeing better margins compared to the same period last year as well. In terms of contribution, 70% of the revenue is -- still continue to be from Thailand, 30% from international, and we now operate in 26 countries. So that's pretty much the same as in the second quarter. In terms of the portfolio, just a quick reminder, 50% of the outlets are owned in terms of number of outlets. In terms of contribution, it's over 90%. And in terms of geography, Thailand continues the biggest part -- to be the biggest part, followed by China and Australia in terms of revenue contribution. And if you look at performance by hub, for China, as I mentioned earlier that we started to see a turnaround of the China business. So we've seen positive same-store sales and also total system sales, pretty much for the -- consistently in the past 3 months. In Thailand, I think it's pretty much stable in terms of same-store sales and also in Australia as well. So those 2 hubs continue to be pressured by the weak consumer confidence. But because of the cost savings, we've been able to report net profit across all the hubs. Quickly on Minor Lifestyle. In terms of revenue and EBITDA and net profit, still pretty much the same as the whole group. Meaning that in terms of year-on-year, the performance has come down. But in terms of Q-on-Q, it's actually improved quite significantly. So the -- we've actually seen revenue decline in the retail trading segment, and that's primarily because of the fashion business. But at the same time, the contract manufacturer, we've actually seen revenue increase, and that's driven by strong sanitizer sales and high demand of the cleaning products. We've done a lot of cost savings as well. So we've actually seen improvement in the net losses in the third quarter compared to the second quarter of the year.

Okay. Moving on to additional corporate information. Let's look at the CapEx reduction plan. Originally, we have CapEx plan hover around like more than THB 10 billion or roughly THB 9 billion to THB 10 billion per year from the 5-year plan that we shared with you earlier in the year. But we have slashed our CapEx quite significantly by about almost half for 2021, 2022. In 2020, we also slashed our CapEx down from THB 17 million or THB 18 billion to about THB 12 billion. So we postpone -- like Jutatip mentioned, we postponed some of the projects to open in later stages just to safeguard our cash flow. And if you look at our leverage ratio, it's up slightly from 1.63 at the end of second quarter to about 1.67. But with the increase of equity from the perpetual bonds that we issued in the third quarter as well as the THB 10 billion right offering, that has helped alleviate the impact -- negative impact from the adoption of TFRS 16 and net losses that we incurred during the quarter. So interest-bearing debt to equity ratio hover around 1.67 at the end of the third quarter. And then we have MINT warrant 7 that will come into play in the next 2, 3 years with equity amount of THB 5 billion in the next 3 years. Covenant waiver, we got it until the end of this year, and that help us with some flexibility amid this uncertainty and the evolution of this situation and our credit rating stands at A rating by TRIS. Let me talk to you about response to the COVID-19 situation in terms of strategies. This is -- the situation took a little longer than everyone anticipated, so we ensure the sustainability of our businesses. There are 5 key priorities that we are focusing on at the moment. One is to the resumption of our business. We start to reopen our businesses as quickly as possible. I'll update you on that later on. And we also reduced our cash burn rate and also preserve our liquidity through cost reduction, CapEx reduction program. We have reduced the breakeven point as a result of this cost-reduction program. We've been able to reduce breakeven point to the level that we can see a better performance earlier than if we have done nothing. And next one, the fourth one is to manage our balance sheet in order to make sure that we meet our financial obligations. And lastly, the long-term new normal strategies to how do we change business models, how do we come up with strategies, long-term strategy and technical strategies, to generate more revenue, reduce costs, make our organization more efficient to weather the storm and show stronger performance going forward. Let's start with the resumption of the -- we resumed business activities. You look at Minor Hotels, the lockdown happened in April and May. Since then, we start to gradually open our hotel portfolio. And now the number of -- the hotels that in operation account for about 84%. So we opened about 84% of our hotel portfolio already. In terms of Minor Food, we -- since the lockdown, we get back to normal faster than hotels on the back of our strong brand, top of mind on consumers' perspective as well as the delivery and takeaway sales. Now the outlets that open account for about more than 90% of total outlets in our portfolio already as well as Minor Lifestyle, we opened all of our outlets for Minor Lifestyle as we speak now. Moving on to look at how we reduce our cost. We have done cost saving and cost-reduction program quite actively and aggressively. We implement it since the end of the first quarter of the year, but more so in the second quarter, and in the third quarter. If you look at this chart, we show you the cost reduction that we did. And then in the second quarter, we managed to reduce costs by more than 50% and in the third quarter, about 34%. So combined second and third quarter, we managed to reduce costs by 42%. So that's -- we just want to highlight how drastic we have shaved our cost. If you look at cost savings across BU and also across geog, we have done it across BU and across geographies, and we have revised our target. As I mentioned to you earlier, that in the second quarter, we said we would save costs by about 25% of 2019 cost and expenses or about 30% of budget numbers. But our latest forecast, reflecting what we have done so far, we have done quite drastic cost saving. We now revise our target cost saving for the full year as high as 35% of '19 level and also almost 40% of budget level. So a very active improvement in cost-saving efforts right there just to show you. And we split it into key cost savings like payroll, leases and other OpEx as well. For payroll, we managed to reduce by 40% of our budget number. And leases, we managed to slash by about 36% -- 26% of our budget number; and other OpEx, more than 40% of the budget number. So the improving development right there. In terms of CapEx that I want to highlight again, just to amplify the slide that I showed you earlier. In 2020, we have managed to slash our CapEx program by 34%. So what we have spent so far this year is the acquisition of Bonchon, the BreadTalk stakes as well as the Boscolo portfolio. That's -- those are the committed CapEx that we have to spend. But still, we managed to slash CapEx down from over THB 17 billion to about THB 12 billion this year. And next year and the year after, we have managed to revise our CapEx program by almost 50% or almost half of their original plans as we show to you right here. So -- I hear someone saying something. So if you can please put yourself on mute, that would be great. And then we'll open the floor for questions later. All right? So next slide, talking about cash burn rate, something that we have shown you over the past 2 quarters. We have minimized our cash burn, the cash burn rate. We used the definition of free cash flow, the negative free cash flow peaked in March at THB 4.3 billion. And since then, it has trended down over time, especially after the full lockdown and after we resumed our businesses. And after our cost-cutting efforts and CapEx suspension effort, we managed to reduce down the average monthly cash burn from average of THB 2.9 billion per month in the second quarter to about average THB 1.5 billion per month in the third quarter. And if you look at the operating cash flow, operating cash flow already in the positive territory pretty much after the lockdown. The only CapEx that show quite a big jump or big chunk, was in August, that's mainly Boscolo portfolio. But since then, we have reduced our CapEx and other unnecessarily expenses. And if you look at our liquidity, we have about THB 30 billion cash on hand and THB 25 billion unutilized working cap facilities. So this is just to show you the traction that we have been telling you over the past quarter or 2. We start off by reducing our cost in order to reduce breakeven point. So breakeven point of Minor as a whole has come down a lot as a result of cost reduction. So it came down from 50% to 60% occupancy to about 34% to 42% occupancy in terms of Minor Hotel breakeven. And then we track whether our occupancy will hit that breakeven level yet or not. We have hit breakeven in the month of August, less so in September and October as a result of the second wave of COVID that happened in Europe that Jutatip mentioned earlier that impact our ability to reach breakeven for Minor Hotel as a whole in September and October. But if you look at elsewhere, like Thailand, Asia, Middle East, Africa, our portfolio have reached breakeven point at the EBITDA level. Even in September and October, we reached breakeven point and pierced over breakeven point already. Now going on to the Europe and Americas where I said, this is the negative impact to our breakeven in September and October because of the second wave that happened. So that's why occupancy still hover around 20% to 30%, not get up to the breakeven point yet. But like Jutatip mentioned to you earlier, many European countries, we monitor the situation on a day-by-day basis, and we keep being updated progress by the team out there. And if you look at Germany, Spain, Belgium, Benelux, U.K., Ireland, they start to show a somewhat improving trend in terms of COVID situation. For example, Germany start to see flattening infections curve. Spain, the health ministry declared that the country has passed its peak of pandemic. So we would hope that in the remainder of the year, November, December, we should see improving trend. And going on to spring next year, we hope that the situation will improve. And going forward in a year or 2 with the vaccines, the situation should become more conducive for our operation. Lastly, in Australia, Jutatip already mentioned, we're already way past our breakeven point in the third quarter already. For Minor Food, the majority of the outlets already been operational in the third quarter and our total system sales has picked up since the lockdown is over. And now they have already past that breakeven point. Actually, the total system sales reach breakeven point in June already -- in the second quarter already. As a result, in the third quarter, Minor Food became profitable at both EBITDA level and NPAT level, all through 3 months of the quarter. And we think the total system sales are expected to recover to reach pre-crisis level by year-end. So encouraging sign right there for Minor Food to support the whole group. For balance sheet management, I would like to highlight that we're still in the middle of the fluid situation, but we are always proactive and always come up with precautionary measures to prevent anything that can affect our performance or our ability to maintain shareholders' value. So we -- if you look at the measure that we did, the debt -- financial covenant, currently, our financial covenant is gross debt-to-equity of 1.75. And we already obtained covenant waiver earlier. And this waiver will last till the next testing in March of 2021. And we're now looking to take precautionary actions to discuss with our creditors, both bondholders and the banks, to extend the debt covenant waiver for more and also possibility of potential change in the covenant -- financial covenant parameters just to be -- just to make it as a preventive measure in case something unexpected happen. In terms of credit rating, national credit rating by TRIS, we have been affirmed at A rating for our company and for the existing senior unsecured debentures. But for subordinated perpetual debenture, we got a rating of BBB+ and the outlook to negative outlook as a result of the COVID situation that we're in right now. In terms of international ratings, that was only a sign onto our MINT -- our U.S. dollar perpetual bonds. It stay at Baa2 rating by Moody's, and BBB flat rating by Fitch Ratings. In terms of debt maturing next year, the question we've been asked by a lot of investors, we have about THB 16 billion of debt due next year, of which THB 9.5 billion, our U.S. dollar perpetual bonds, which is going to be due at the very last month of the year next year, which is December. Like I said, we have enough liquidity position in terms of cash and in terms of unutilized credit facilities. So we're still comfortable with the refinancing of this debt maturity that's coming up next year. But on the side, another precautionary measures that we prepare ourselves ready and always make it ready to be executed anytime if needed, again, depending on the situation that evolves day by day, we have a lot of assets -- good assets, quality assets. We -- especially in NH, they have a strong replaceable real estate assets across key gateway cities in Europe in good locations. We talked about it before when we acquire NH. And that -- those assets give us a room to act in case we need it. The asset pool that we have hover at about more than THB 100 billion in value. And then we have identified and -- we have identified certain assets that can be sold, and we are in advanced stage to be ready to convert some to some of the investors that we talked to, so -- over the next 12 to 15 months, if needed. So out of the pool of THB 100 billion assets value that we have, we have identified about THB 10 billion for base case scenario to be -- to execute it. But if -- we can scale it up and down to about THB 35 billion, as we show in this chart, depending on the evolution of the situation, if needed. But you probably have seen our track record. In the past year or so, we have done sales and leaseback transaction. That proves to be successful in terms of the ability to execute. And in terms of demand, like I said, we have already discussed with some of the real estate investor. Demand, still significant right there. We can take advantage of low interest rate environment that we have, resulting in the acceptable yield for us. We are going to execute this asset sale, if we want to. Moving on to the beyond COVID and what are we doing now to prepare for a new normal. We have shared with you over the past 2 quarters, but we still continue to adjust our businesses to serve the customer in the medium to long term. For Minor Hotel, we're trying to engage consumers as much as we can. We came up with a few programs. Right now, we have to cater more to domestic travelers. So we come up with local resident, exclusive campaign. A We Travel Together campaign that the Thai government came up with. We are one of the active participants in that campaign. And we have ASQ and ALSQ businesses. So we have introduced Quarantine In Style campaign for those who want to come into Thailand and have to stay in the quarantine facilities. Next one, we saw the changing consumer behavior. We would adapt our operation to have more -- a better hygiene protocol, cleanliness of the rooms and the facilities is very important for us. And we anticipate the changing in the booking behavior and booking experience of consumers as a result of COVID. So we have to adjust our booking facilities and staff to respond to such changing trend. Also, the change in market mix. We continue to monitor the change in market mix in terms of B2B and B2C. We have adjusted quite actively both in this part of the world and Europe as well. And then we continue to strengthen our brand equity. The reliability of the brand is very important for people to come back to stay. So we launched an Anantara Escapism campaign, Dare to Dream with Avani. And we also are looking into doing a strong loyalty program for our repeat guests in the long term. Health and safety program, I already talk about it. Each of our brands have their own campaign. We also emphasize the wellness and medical spa. We have a joint venture with international well-known wellness partner like Anantara. We have a JV partnership with Verita Healthcare Group. We have RAKxa, Wellness Retreat center in Bangkachao. We have signed an MoU with VLCC on Wellness Tourism, the VLCC in India. And we also partner with the Clinique la Prairie for a spa at our St. Regis. In terms of supply chain, we've emphasized the sustainability and also consolidate and centralize our supply chain for cost efficiency. And lastly, speaking about cost, we're also doing the rightsizing of the back-of-house operations and doing restructure and streamline our cost expenses with suppliers and landlords on a sustainable basis as well. On Minor Food, similarly, we do pretty much the same, strengthen brand equity as well. We have done brand revitalized program for some of the key brands. And also, we focus on customer engagement in terms of marketing campaigns and loyalty programs. We always come up with new product innovation. You probably have seen our new product from Pizza Company, from Swensen's. We set up MFIT, or Minor Food Innovation Team, which was launched in the third quarter to come up with a more proactive product innovation, and we have prepared a strong product pipeline in coming quarters. And delivery platform, we're one of the restaurant chain that have our own delivery. We would continue to strengthen that platform in terms of application, the delivery journey, the usage and the stable back-end system for this delivery to maintain the momentum even after COVID. And health and safety, we continue to focus on health and hygiene. We also get SHA authorization standard from the TAT, we just announced yesterday. That's another development trend that could help heighten our brand reliability in terms of health and hygiene and safety. And changing consumer behavior in terms of Minor Food, there's a temporary shift towards value and also health conscious trend and then the convenience that consumers want. We, as a result, adjust our store format, come up with the new menu, which become more health conscious menu to respond to consumer behavior that has changed. Supply chain, similar to Minor Hotels, consolidate, centralize, optimize stock levels and maximize cost efficiencies. Digital transformation, I talked about it. End-to-end customer journey has to be seamless. Through digital, we come up with data analytics to predict, anticipate customer demand and satisfy customers not what they want today, but what they want tomorrow as well. And also loyalty and delivery has to be strong on a solid digital platform that we have. Lastly, reconfigure our workforce. We transform organization of Minor Food with the new leadership and structure and the new way of working to make it more agile and respond well to the situation, which we -- the number bodes well now that Minor Food become profitable in the third quarter at NPAT level throughout the 3 months. That reflect our ability to transform ourselves over the past few months. So that's the wrap for the whole presentation. I hope this is useful, and we are going to open the floor for any questions that you may have.

[Operator Instructions]

[Operator Instructions]

There's a first question about cash burn. How will cash burn increased in the fourth quarter and what level per month?

Well, like I said, the -- we have slashed our CapEx program and our cost reduction has been on track all along. It depends on the operating cash flow, which we think that it will remain positive. If you look at the trend, like I said, it depends on what's going on in Europe, in particular, the second wave that happened in October and November are probably going to affect performance and cash. But we would hope that in December, things will get better. Like I said, Germany, Spain, Benelux, U.K., start to see the flattening infection curve as we monitor the situation day by day. So have to wait and see the operating cash flow. But in terms of CapEx, we still -- we have slashed in a big way.

Okay. The second question is on the unutilized facility. We said that our working cap facility is THB 25 billion. How much is it in committed facilities? I would say primarily, it's uncommitted. We have been in conversations with finance institutions who gave us the facilities pretty much consistently. And we -- at this moment, we see no problem in drawing these facilities if we have to. Question on the extension of the waiver. So how long would we like to expand the covenant waiver?

It's still under negotiation. We still have to talk to the bondholder and our creditors. It's still an ongoing process. So we would update you as soon as we know what is the extension timeline.

There's a question about occupancy level, asking if we will see occupancy breakeven level in the fourth quarter?

Well, again, like I said, it's -- the occupancy breakeven, that had been held back in the third quarter and also in October, coming from Europe, the situation in Europe. So we have to monitor situation in Europe very closely to see whether we can reach that breakeven for the whole group or not. Because as you can see, as I showed earlier, Thailand, Asia, Australia have already breached or passed that breakeven point. It's just European that hasn't reached that point. So we have to see the situation. But as I said, we have started to see improvement in terms of the flattening second wave infection curve. But the situation is still fluid, and is still uncertain. So we have to still keep monitoring the situation.

Again, more question on the Hotel business. So what is the ADR decline in the fourth quarter today? So if you look at in terms of -- in October, that's the latest number that we have, for the owned and leased business model, for the ADR, it's down like in the mid- to high 20s in terms of the ADR. There's a question on the sales and leaseback business model. If -- because we're using the sales and leaseback business model, that means we have the least expenses. Are we planning to change that to management business model instead?

Well, we open to all options. We're looking at both sales and leasebacks, sales and managed back, all options are on the table, and then it depends on what kind of yield that's acceptable to us. And then like I said earlier, we will take advantage of low interest rate environment to get a best deal for us. So this is still underway, it's still in the process of working with the potential buyer if we need to execute this plan depending on the evolution of the situation.

And then for the potential asset sales, do we have a timeline?

Again, depending on the evolution of the situation, but we make ourselves ready from now over the next 12 to 15 months, we're ready if we have to do it.

Question. I'm trying to kind of -- I think the question is, what will be the breakeven level in 2021? It's going to be the same level as 2020? And I guess, in terms of cost, how much is temporary and how much is permanent?

Well, in terms of breakeven level, it still depends on an ongoing cost reduction program that we're going to do -- that we are doing and going to do going forward and also depends on the evolution of the situation as well as the negotiation with the landlord and suppliers. I would say the breakeven that we had before COVID, it's -- at one point, we reduced it down to this level in the mid of the COVID situation drastically this year, 2020. But if the business volume come back bit by bit next year, that will help our operating leverage. So the breakeven still -- also a moving target still. We're still working on this breakeven point for next year. So again, it all depends on business volume that's going to come back next year. Cost reduction program and negotiate -- ongoing negotiation with landlords and suppliers that we're doing as of now. So we would try to curtail a breakeven. Definitely, it's going to be lower than breakeven before COVID because we become more efficient and we become -- we managed to bring down some of the costs permanently, not only temporarily. So breakeven will be lower than pre-COVID level for 2021. But whether it would be higher or lower than 2020 is remained to be seen because it's still an ongoing process.

How long can the current available cash and unutilized facility sustain the group's cash flow, assuming situation remains stagnant with no improvement?

Well, right now, we have cash on hand of THB 30 billion and working cap facility of THB 25 billion. As you can -- well, as I said, if you look at the average cash burn in the third quarter, it has come down substantially from second quarter. Third quarter average cash burn was about THB 1.5 billion per month. So I would say the situation -- if the situation remains stagnant, we would still continue to be able to stay afloat for at least another 10 to 12 months.

For the asset rotation, the question is, the THB 10 billion to THB 35 billion asset sales value, is it based on historical value or the potential valuation based on our discussions with potential investors? I think that's based on our -- because we've already started conversations with potential investors so that's the value that we're actually talking to investors on, not on historicals. I would say this is more of the market value. What did the negative operating cash flow of THB 200 million in September, is it from the second wave in your view?

Well, some of the expenses, it's like in the quarter payment or -- so it's fluctuated -- can fluctuate during the quarter some of the payment due and mostly due in quarter end. So that's probably part of the reason.

Can you share the situation in the Maldives, which market are we beginning to fill up the demand to 70% occupancy so quickly? How do we do that, I guess? And does this apply to other locations?

Well, Maldives doesn't have -- I believe that anybody can go to Maldives without quarantine. So it's welcome a lot of travelers who want to enjoy the whole beach area without having to stay in quarantine facilities. So that -- and then also our resort, it's one of the best resort that people know, Anantara has been top-rated resorts on many publications like Condé Nast Traveler, Travel + Leisure. So people want -- that's probably why people pent-up demand coming to our resort.

For the debt covenant waiver expansion, do we have to offer some form of concession, higher rate, or any kind of...

Yes. Well, possible because we -- but we can't say definitely. We're still in talks with the creditors, bondholders. We're still under negotiation -- under discussion process. So we would update you with the final detail, if any, going forward. Still under negotiation.

Are we able to use some of the cash and -- that we have today to repay debt obligations in order to reduce our interest-bearing debt level?

Yes, we can. But -- so not only cash that we can manage, but we have to look at the situation in the fourth quarter as well. Operating environment, the improvement situation in Europe and all to see how much loss that we can reduce quarter-on-quarter, so still remain to be seen. But yes, we can manage our cash on hand that we have.

What are the yields for the recent sale and leaseback assets? Do we have any minimum range for the deal?

Well, in the past transaction, it hover around like up to 4% [Technical Difficulty] Well, just now we lost the signal. We reconnect again. I hope everyone hear us. Yes? Can somebody text us whether they can hear us okay? All right.

We can hear you.

Okay. Cash in the third quarter increased substantially due to debt drawdown in each level. What's the repayment term for these loans? And are there any restrictions in transferring these funds to repay debt at MINT level? I think in terms of repayment term, it's -- they've -- NH already has done like negotiations on repayment terms or it's been extended to 2023. And in terms of whether we can use NH's cash to repay the debt at MINT's level, I think because it's 2 listed companies separately, so we need to keep NH's cash at NH's level. So -- and especially at this point in time, we also need the cash for liquidity purposes as well. So we'll continue to keep the cash as is. I think that's all the questions we have for now. If any of you have any more questions, please feel free to contact the IR department directly. Thank you for joining this call and apologies for some technical difficulties that we have. We'll try to improve that going into subsequent quarters. Thank you and [Foreign Language].

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