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

Good morning, and welcome to Minor International's Third Quarter 2021 Analyst Meeting. It is our pleasure to introduce the presentation, as you will hear from Mr. Chaiyapat Paitoon, Chief Strategy Officer; and Mrs. Jutatip Adulbhan, Vice President of Investor Relations. Joining them in the Q&A session are Mr. Brian Delaney, Chief Financial Officer; and Mr. Kosin Chantikul, Chief Investment Officer. [Operator Instructions] Now I would like to pass over to Mr. Chaiyapat and Mrs. Jutatip for the presentation.

Thank you, and good morning, everyone. I believe you guys have seen our results, which released last week on Friday, we still continue to see some improvement in our results. So today agenda is pretty much similar to our previous meetings. We start off with the third quarter results in review, and then we will deep dive into the detailed operating stats of each of our business, hotels, food, lifestyle, respectively. And then we followed by corporate information and our response to COVID strategy update. And later on, we will talk a little bit about business outlook at the very end of the presentation. So just to highlight the results, you've seen our losses have come down, narrow year-on-year and quarter-on-quarter, showing significant improvement. So we reported losses -- core losses of THB 2.4 billion in the third quarter. Something to highlight the main recovery coming from Europe. From Minor Hotels, in particular, they see such a big improvement on the back of higher vaccination rollout and easing of the mobility restrictions. So we see higher occupancy in Europe over the past quarter. But Minor Food, even though they see their profit coming down year-on-year on the back of lockdown here and there, especially in Thailand, where you -- we've seen the lockdown and close up some of the dine-in restaurant at the beginning of the quarter. But still Minor Food continue to be profitable in the third quarter on the back of their disciplined cost reduction. And this is profit that they made for a fifth consecutive quarter already. So if you look -- drill down to a Minor Hotel apart from Europe that we see recovery, we also see some recovery in the Maldives since we reopened our properties in Maldives late last year. Occupancy climb, so did ADR and then we believe that, that also contributed well to our results of Minor Hotel. As for management letting rights in Australia and New Zealand, they continue to report positive EBITDA despite some lockdown that happened here and there in Australia. And apart from hotel business, the mixed-use business like residential development and timeshare business or AVC and Anantara Vacation Club, still see profit in the black at the NPAT level in this quarter as well. If you look at the second column, where we believe that we're going to continue seeing positive outlook for our group. The vaccination rates have improved around the world with the lead coming from Europe as we've seen the improvement in our results of NH, but fully vaccinated population is now over 70% in Europe, and we're likely to see more and more to come and then that trigger mobility among travelers, especially domestic travelers and intra-European travelers. In Thailand and Australia, we start to see the country reopening program. Like Thailand, we start to open in November, even though we have like Phuket Sandbox and so we plus started before in July, but now the whole country have a certain programs of the reopening, including Test and Go campaign and living in Blue Zone campaign that will welcome more tourists in upcoming months, especially during this festive season. Other destinations, we hope that vaccination will also help easing mobility -- encouraging mobility as well. We also continue to be very disciplined in terms of handling COVID situation. Cost control and CapEx cuts remain our priority to minimize cash flow and also tight containing breakeven points, albeit the increase in business activities or business volumes tend to automatically or naturally raise breakeven point level. But we believe that the breakeven point after the COVID probably going to be lower or better than pre-COVID level on the back of our higher efficiency as part of our cost-cutting program that we have done over the past year or so. In terms of balance sheet management, we have been proactively managed our liabilities, equities. We have implement and successfully a cheap capital raising exercise last year. And also we have executed asset rotation that we indicated that we're going to do in the past, and we managed to execute it on plan or even ahead of schedule for some of the liability or balance sheet management both MINT level and at NH level. So we are already having this solid foundation to capture demand recovery in upcoming months. In terms of cash flow, free cash flow of ours continue to be positive for the second consecutive quarter already at about THB 4.9 billion positive in the third quarter. Why we still have cash on hand of more than THB 20 billion at the end of October and then credit facilities that we haven't utilized is over THB 30 billion as well. So we have enough liquidity to endure if there's any uncertainties that's going to happen in the future, but we still believe in strong recovery. Longer term, we will continue to strengthen our brand equity, adjust our promotion sales initiatives and come up with new products to attract customers expansion through an asset-light business, probably going to be a priority at the moment due to our intention to preserve cash and liquidity in the near to medium term before we go into asset-heavy investment in the far future, when our earnings recovery is more solid and stabilized. For Minor Food, in particular, we are going to -- we are in the process of just adjusting our sales promotion strategies in our channel, especially digital transformation that we made and also new product innovation to keep relevant to a new generation of consumer. Elsewhere in China, we continue to expand our outlets of Riverside. Longer term, we would think that we managed to capture changing consumer behavior and adjust our business model accordingly. This slide, I already talked to you about it. We managed to increase revenue by 33% year-on-year in the third quarter. Contribution primarily coming from NH, as you can see there, and also Minor Hotels. While Minor Food and Minor Lifestyles revenue coming down year-on-year on the back of the lockdown that happened, particularly in Thailand. And in terms of net profit, we see net profit narrowed by half from negative THB 4.8 billion last year to about THB 2.4 billion in this third quarter. Improvement coming from, of course, in NH, as I said earlier, alongside the revenue as well as Minor Hotels elsewhere. Why Minor Food and Minor Lifestyle seeing profit -- seeing profit coming down because of the lockdown that happened in Thailand, in particular. This is Q-on-Q. We also saw improvement as well. Revenue rose 27% quarter-on-quarter. Net profit also narrowed by 30% quarter-on-quarter on the back of similar dynamics or reasons that I just mentioned to you earlier. Just to give you a snapshot of a split of our revenue between international and Thailand. In the first 9 months of this year, we see Thailand contribution coming down to about 26% while international is 74%. That was due to both strong recovery in Europe that we've seen and also the lockdown that happened in Thailand, which impact some of the business in the country. So that's, hence, the split of Thailand coming down in the first 9 months compared with the previous year. So from here, I'll hand over to Jutatip to talk about the detail of the business stats.

Going into Minor Hotels. In terms of revenue, we actually saw revenue increase of almost 50% in quarter-on-quarter and over 60% year-on-year. And that's primarily because of pretty much all the business units whether it's owned and leased managed MLR, managed hotels and mixed-use, we actually saw our revenue increase year-on-year. Whereas for Q-on-Q, we actually saw weakness in MLR, and that's finally because of the lockdown in Australia and managed hotels, and that's primarily because of hotels in Thailand. In terms of geography, all geographies actually saw improvements in revenue with the exception of Thailand again because of the lockdown. The notable improvement is actually Europe and Maldives and the Middle East as we offset throughout this presentation. And in terms of Q-on-Q, again, because of Thailand and Australia that's pulled down, but actually, Europe actually improved significantly and was enough to offset the decline of the other geographies. Because of the revenue increase, we also saw EBITDA increase and also the narrow of the net loss as well. A few pages going into the start of each of these geographies -- each of the business units, sorry, for owned and leased hotels. Actually, the number of rooms are fairly flat, but we actually saw RevPar almost doubling year-on-year from 2020, and that's driven by both occupancy and rate as you can see. And revenue of owned and leased portfolio increased by about 78% because of that. And if you look at the monthly trend, you can see that going into September, October, we're actually approaching the 2019 level already. So the recovery still continues going into the fourth quarter of this year. And that's primarily again because of European portfolio and also the Maldives. Going into each of the geography. So the first one that's most important to us today is Europe and the Americas. So if you look at the RevPar of this portfolio, it's actually almost doubled compared to last year and because of the European recovery. So as the majority of our customers are domestic and regional customers, we actually get the direct benefit from the reopenings. And if you look at the graph at the bottom right-hand side, you see that it's primarily from Spain and Italy that are the strongest -- that we're seeing the strongest recovery. And because of that, the RevPar almost doubled from both occupancy and rate. And if you look at actually, the occupancy, even though it looks like in the third quarter, it's -- our occupancy is only about 49%, but that's because it's the average for the whole order. But if you look at a monthly trend, we actually see occupancy improving from, let's say, like in the low 40s in July to about 51% in August, 55% in September. And in October, it's already reached 60%. So the trend continues going into the fourth quarter as well. So as we can see it for monthly chart at the bottom left-hand corner, we're actually seeing RevPar approaching 2019 level as well. And then going into a little bit more detail on the European portfolio. We are seeing vaccination rates are over 75% fully vaccination in EU. And if you look at the -- in terms of like the countries that were actually present in which is like Spain, Italy, Germany, Belgium and Netherlands, all these countries actually have vaccination rates of over 80% already. So that actually helps a lot with the overall mobility in Europe. So even though the number of cases continue to rise. But in terms of the death rate, it's actually much lower. So that actually supports us in terms of hotels opening. So now we have over 95% of the hotels open in Europe. And in terms of occupancy and ADR, again, if you look at the weekly trend continues to rise. Now it's on a weekly basis, it's already over 60% and that's driven primarily by, again, intra-European demand and the B2C leisure segment. We're also seeing corporate segment slowly coming back. So we're seeing bookings for both fourth quarter and also going to next year as well for NH. Going into Thailand and the Maldives. Again, Thailand, we've actually seen the impact from the lockdown in the third quarter, where in July and August, it was actually quite limited in terms of the mobility within -- even within the country. But having said that, we've actually seen the RevPar in the provinces are slightly improving, so that's primarily because of the Phuket Sandbox. So that's actually helped part of the Thailand overall portfolio. And we're seeing further improvement going into September, October, especially with the reopening of the country and now also reopening of the border. So we'll continue to see that the trend of recovery going forward as well. For Maldives, we're already back to pre-COVID level. RevPar is up by 9% over 2019 level, driven by both occupancy and rates and partly, it's also because Maldives have been one of the first countries to actually open up the country without having to quarantine so they actually have the advantage of people coming in early because of that. But also, this is actually a very good example of the quality of the travelers that are going to the Maldives. Even though we don't have any more of the Chinese going into the Maldives because we've been focusing on other countries, we're actually seeing very good quality of travelers coming in. So we've seen both occupancy and rates going up. And as you can see in October -- September and October, RevPar is already 22% above 2019 levels. So it's actually a very good trend in the Maldives. Going to the asset-light business model. In Australia, again, in the third quarter, they were actually impacted by the lockdown. But despite of that, we still see RevPar increased by about 3% in Aussie dollar term compared to last year. So even though the occupancy went down, we were actually trying to hold up the rates because we knew that reducing the rates will not help because it's just like the lockdown people will not be traveling. But going into October, once being started to reopen, we started to see things coming back fairly quickly as well. So occupancy in October is already in the high 70s, so it's already back up to the pre-COVID 2019 level for the Australian market. So that actually signifies that once things start to reopen, recovery actually is very quick. So that's pretty much similar to the story back in January when Australia started to reopen the country at that time. So things actually come back very quickly. In terms of managed hotels, we actually saw a RevPar increase of about 45% compared to last year. So that's, again, from the reopening of the countries, whether it's in Europe or in the Middle East. In terms of hotel expansion, so this is pretty similar to like previous quarters that we reported. So over the next 2 years, we -- in terms of our focus, it will be more on the asset-light business model as we're trying to preserve cash. So because of that, we have 13 hotels that are under investment and leased business model in -- over the next 2 years, but we have about 51 hotels in the pipeline for managed hotels over the next 4 years. For the mixed-use business, the business has continue to do well. So -- we continue to sell residential units and AVC continue to see sales growth, especially in the China market. So that continues to be our main market. So because of that, we actually saw a 9% increase in number of members. Revenue of the mixed-use business increased by about 15% year-on-year in the third quarter. So -- and both residential and AVC business remained profitable at the bottom line. Going into Minor Food. For Minor Food, the revenue actually came down slightly by about 7% compared to last year and by 8% compared to last quarter. So that's primarily because of the same-store sales, that's down. So we've actually seen same-store sales down in all the 3 hubs, but we think it's temporary, and it's primarily because of the COVID-19 Delta variant that impacted Thailand, Australia and China in the third quarter. In terms of our expansion, we've been -- it's been -- we've seen a number of outlets grow by about 1%. Total system sales declined in the third quarter because, again, of the same-store sales decline, while a number of outlets actually remain quite stable. Because of the revenue decline, we actually saw EBITDA and net profit. EBITDA decline but net profit was flat Q-on-Q and down year-on-year. And -- and the EBITDA -- sorry, the net profit remained profitable for the fifth consecutive quarter of Minor Food already. Going into the stats by each of the hub. Again, Thailand, we actually saw a decline, especially in July and August because of the lockdown. But after that we started to see improvement. And in October, both same-store sales and total system sales for Thailand is already back to positive territory as things started to reopen. For China, again, they're also impacted by the Delta variant, which came a little bit later in about August and September. So it's still a little bit volatile in China at the moment. But we feel that once things clear up again, the recovery will come back quite quickly. In Australia, also same trend impacted by the Delta variant in third quarter. For the monthly trend, we're starting to see improvement going into October although it's still a little bit in the negative territory. On the Lifestyle side, sales was down by -- because of both retail trading and contract manufacturing. So for retail trading, again, because the lockdown in the third quarter, we actually saw store closures. And also the contract manufacturing, we actually had to reduce the workforce density. So because of that production was also reduced. So we actually saw a revenue decline because of that. And because of the decline in revenue, EBITDA and net profit saw slightly higher losses for the retail trading business. Corporate Information, in terms of CapEx, that's pretty much unchanged. So we continue to reduce and postpone our CapEx for 2021 and 2022. So that's still the same plan. In terms of debt to equity, slightly declined to about 2.15x in third quarter of 2021 compared to 2.17 in the second quarter. So even though our equity was reduced slightly because of the net losses, but because we also repaid some of the debt using the asset rotation proceeds, we were able to reduce a little bit of our debt-to-equity ratio. Anyway, the covenant waiver is still in place until 2022. So we still have room to further reduce our debt-to-equity ratio. With cash on hand of THB 23 billion and unconverted warrant of about THB 15 billion. And we also have the unusualized facility THB of 32 billion. So that's enough for us to maintain the -- preserve liquidity for our operations going forward as we go through this recovery phase. And now I turn back to Chaiyapat.

Okay. Well, now we're just going to update respond to COVID-19 strategies that we do. You're probably familiar with this page already. What we have been doing so far in the past few months is to resume business activities, minimize cash burn, reserve liquidity, reduce even and then manage -- proactively manage our balance sheet and also forecast the trend of consumer behavior in order to adjust our business model. So I'll jump right into detail. First of all, the reassumption of our business activities, you can see that there's some outbreak and second wave, third wave here and there that happened. But since September and October, we start to see the easing of the lockdown happened almost everywhere. If you look at our Minor Hotels of all over 500 hotels that we operate, 96% are operational already. And for Minor Food, 94% of our 2,212 outlets are operational at the moment. For Minor Lifestyle, 97% of the outlets are already operational. So almost 100% of our outlet restaurants and hotels are operational at the moment following the easing of the restrictions that happened in the past couple of months. In terms of minimize cash burn and preserve liquidity, we're still focusing on cost control. But if you look at our cost in the third quarter, is -- it rose by 11%, that only because of the increase in business activities that happened on the recovery that we have seen. In fact, the cost increase is much lower than the revenue increase of 33%. That was a result of our effort to streamline or rationalize our costs in the past few months. So we've seen higher efficiency and more productivity and hence, being able to generate revenue on the back of a lower cost base. If you look at cost -- our costs, most of the costs that increase coming from payroll and OpEx, which increased alongside business activities. In terms of CapEx, this is similar to previous quarter. I'm just going to go through very quickly. Last year, we slashed CapEx by 29%. This year, we slashed our CapEx by half. And next year, we're probably going to cut our CapEx from our original plan by about 1/3. So just to recap something that we've been telling you already over the past quarter -- over the past 2 quarters. In terms of cash burn, cash burn rate, if you look at our free cash flow, our free cash flow turned positive since June 2021, all along on the back of the earnings recovery that we have seen and also on the back of asset rotation program that we have been successfully executed as planned and as promised. You've seen that free cash flow have been staying in positive level for 2 consecutive quarters already. So that will provide a solid foundation for us to capture the business recovery. Apart from that, we still have cash in hand by about THB 23 billion and working cap facilities about THB 33 billion. So that's enough for us to weather this uncertainties that we might see in the future. Breakeven point just to update. We have been successfully reducing our cost and improve our efficiency productivity. That's cost reduction have lower and contained breakeven point. At 1 point before COVID, occupancy breakeven of Minor Hotels is as high as 50% to 60%, but we managed to brought it down to about 30% to 40% during peak of the COVID period. But once business volume activity is rising and recovering, naturally, this breakeven will probably go up, but it's not -- it's probably not going to go up to the level that we saw before COVID on the back of our cost cutting and productivity streamlining. And in the third quarter, we have seen our occupancy going to about 51% on average. That made us our hotels at the property level, seeing EBITDA breakeven, EBITDA pre-TFRS breakeven at a property level already. And we hope that in months quarters to come, we're probably going to see a breakeven NPAT level to follow soon. Breaking it down to geography. Most of the geography like Europe, Thailand probably have seen EBITDA at property level pre-TFRS almost breakeven point or past breakeven point already. But if you factor in corporate costs or centralized cost functions and NPAT consolidated level, it's probably going to arrive in the upcoming quarters. Balance sheet management. This is the checklist that we shared with you since last quarter, not much change from here. If you look at our liability management, we have proactively done both at MINT and NH level. At MINT, we issued a corporate bond of THB 10 billion. We also issued 5-year callable perpetual bonds of THB 300 million to replace the old one that due in December. So we have already successfully done that. And we also obtained the rating of A from TRIS. They just confirmed our rating, even though with negative outlook maintained on the back of the macro backdrop or COVID situation that still induce some uncertainties. And we still have extension of waiver of covenant testing at the end of 2022. And we also changed the covenant calculation to carve out the impact from COVID impairment from our calculation of equity until the year 2024. And in each level, we managed to issue EUR 400 million senior secured notes, which were due to '26 to redeem the outstanding senior secured notes due 2023. Basically, we extend the maturity well to give us some breathing room to manage our liabilities. So maturity extension have done in terms of syndicated facility, and also revolving credit facilities, basically from '23 to 2026. And NH also extend the waiver of the debt covenant testing on all material loans until the end of next year as well. In terms of asset rotation, you probably have seen we managed to do sales and manage back of 2 Tivoli hotels in Portugal. And also, we have successfully done sales and leaseback of our NH Gran Calderón to get proceeds to reduce our debt and improve our leverage ratio. For equity, we still have 3 tranches of warrants, which is going to come in and getting exercised, that will give us about THB 15 billion over the next 3 years until 2024. And at NH level, right offering of EUR 106 million has been successfully completed in September as well. So that's the -- our proactive balance sheet management and liability management that we did over the past quarter or 2. If you -- next, we will talk about business outlook. This is just to show you the gauge. A lot of them has arrived to green zone already. In terms of balance sheet positions, asset rotation, equity-based reinforcement that I just told you in previous slides make us feel more comfortable with our financial position. In terms of liquidity management, considering cash in hand that we have over THB 20 billion working facility -- working capital facility that we have, we -- and also cost reduction that we have done, we're pretty much comfortable with the liquidity reserve that we have. In terms of business, Minor Hotel, we've seen strong and visible recovery in Europe. And then that, we hope, continue to come in upcoming months and quarters. In Australia, as Jutatip pointed out, management letting rights, see a rebound in occupancy to over 70% in October that give us some comfort, even though we still saw some lockdown here and there in Australia. In Asia, we start to see recovery as well, especially Thailand, with the acceleration of vaccination that allowed the country to feel confident in the reopening. We start to reopen the country in November, and we hope that, that will bring in more tourists in upcoming months. As well as the domestic tourism that's going to become a little bit more active on the back of the government program like Thai Travel Together campaign and Tour Teaw Thai campaign. On Minor Food, Thailand, we still see profitable across the board. Even though in the third quarter, we start -- we saw negative same-store sales. But in October, we start to see some improving trend already. China always see a strong sales growth on the back of outlet expansion, even though they do have COVID cases here and there, but the government in China using heavy-handed strategies to curtail COVID. So they always bounce back or rebound very quickly after anything happened. And so as Australia that I mentioned earlier. Next 2 slides is the slides that we've been telling you in terms of a medium- and long-term road map. I'm probably not going to go into detail because we discussed this already in the past, previous quarter. Basically, we will continue to strengthen brand equity, make our customer journey and experience more -- even more satisfactory than before, doing digital transformation to connect it well with consumers, also proactive manage our balance sheet and asset portfolio on the back of our rotation strategy and also the synergy that we can extract from having NH with us going forward. For Minor Food, just to recap, we will focus on new product innovation, digital transformation to connect well with consumer similar to Minor Hotel making brand, which has been around for so many years, still relevant to a new generation of consumers and also doing back and transformation in terms of marketing, loyalty program, delivery, data analytics, and Minor Food has been helping alleviating negative impact from COVID all along since last year, boosting by -- boosted by their profitable performance over the past 5 quarters. So that's a wrap for our presentation this quarter. I think we still have a little bit of time for Q&A. So we open the floor to Q&A at the moment.

[Operator Instructions] The first question is, Europe is going back to lockdown mode. Do you anticipate another round of impact on RevPar and hotel closure?

Well, we're still seeing some pickup even though the pickup pace is growing at a lower rate compared with the previous weeks and previous months. But I think that's only -- we would call it soft restriction measures. In some countries, just shows or opt to do unvaccinated lockdown. But in general, we should see the recovery in Europe still. And then like Jutatip mentioned in one of the slides, even though cases -- a number of cases rising, but the effectiveness of vaccination has contained hospitalization and death rates to a level that people now become more comfortable and confident to lead the COVID even though it's still going to be with us in the future. So I believe that we will continue to see recovery, not only from leisure demand, like Jutatip said, it's also coming from business travelers as well.

I'll go to the next question before we have someone raising hand. But -- what is your take on rising inflation, particularly in Europe? Would this offset your expectation that margin could be higher post pandemic compared to the pre-COVID margin?

Well, I think talking about inflation as a whole in general for our company, we have been managing our costs really well even before COVID time. But especially during COVID time, our supply chain management working really hard to make sure that we have supply raw materials and pricing negotiation hedging, lock in pricing, lock in rates in place, and we have been streamlining our costs and streamline our productivity. So we've seen efficiency and productivity improved dramatically. That we also alleviate some of the inflationary pressure that would happen also for active supply chain, activities, as I mentioned before, will also help as well.

We have Khun Soraphob asking questions.

[Foreign Language] Can you hear me? Yes. So I have 2 questions. The first one is actually the follow-up of the question already been asked from the chat room, right? So the fourth quarter in Europe seems to be extended somewhere, as you mentioned during last time, right? But now with rising COVID cases in Europe and then as it start to reopen in mall. And the first quarter in Europe is normally the lower season. What's your view for first quarter of 2022 for the European operations? Can you still like even at EBITDA level will continue to improve Q-on-Q from the fourth quarter? So that's my first question.

Okay. Well, address your first question first. I think -- well, first quarter is going to be always be a low season for Europe anyway. But we hope that the pent-up demand and people feel more comfortable traveling within the region. We'll still help compensate for the low season that we've seen all along. But it's not going to make that low season going away completely. But -- and one more is that apart from the leisure demand that we've seen during summer months in the fourth quarter. And hopefully, in the first quarter, we see the coming back of business travelers, and we see gradual reactivation of small business group events, all that things, hope to materialize through in the fourth -- hopefully first quarter. And I have to tell you that the visibility of that, it's not clear because the booking window has been shortened from dramatically from the past. So we would only know within the month, like 50% to 60% -- over 60% of the booking will come within the same month. But -- From our perspective, we hope that pent-up demand, the coming of the business travelers and the mobility within intra-European region will help alleviate the impact of the low season in the first quarter.

I see. So not only we will enjoy extended summer for the low season, next year will be better than the usual, right? So it's not it will not be as low as previously.

Yes.

So my next question is on the food side, right? You have shared already that on the China business, right? The growth is coming more from outlet expansion. And especially now that the base has been resume, right? So growth for next year is likely to continue to come from outlet expansion. Maybe can you share more with us about what's your strategy on the outlet expansion? And can you continue to expand more in 2022?

Well, even during COVID period and COVID case, wave, happened here and there in China. And during the first 9 months of 2021, we managed to increase 21 -- over 20 outlets in China. So that's quite a proactive move, and we will continue to have an aspiration to improve the number of outlets in China and not only the expansion of the outlets that will yield total system sales growth. We hope that once people start to feel more comfortable living with COVID, restriction or locked out or ease in a very quick, immediate manner. Like I said, government all the way crack COVID case fast in China and then the country gets back up and running really fast. That will probably -- hopefully, that will help also help same-store sales growth to improve as well.

So for the outlet expansion in China, it is more expanding into new area or expanding of the new brands or new type of outlets?

It's Riverside. Primarily we have Riverside -- over the first 9 months of this year, I think we opened about 18 or 19 Riverside outlets. And then we opened Coffee Club as well during the first 9 months of this year. So if that goes well, we will continue to expand. But primarily, we'll focus on, I'll say, Riverside at the moment.

Okay. Another question in the chat. What's your recent development rate in Thailand market for hotel and food business? Development in Thailand?

Well, I don't -- I'm not sure whether I understand your definition of development. If you talk about the expansion of our business in that sense. Like I said, we have been preserve cash and cut down our CapEx, but we opt to do asset-light expansion. For example, we do more hotel management contract. We have executed partnership with Funyard Hotels in China, where we build hotels in certain countries in the Middle East during COVID period. So probably that's -- if we talk about recent development in terms of business expansion, that's what we're doing.

Okay. Next question. Given the COVID-19 impact is fluid and prolonged situation, has MINT done any scenario analysis to see the possibility that we will reach the financial covenant in 2023? If this is probable, what would MINT plan to do?

Well, we have several scenarios, but now most scenarios suggest that we're going to pull through to 2023 on the back of the earnings recovery that we see as well as the asset rotation that we have been executed, and we have -- like we've been telling you all along we have a number of quality assets, which will allow us to execute asset rotation strategy if needed in the future. So I would say we're still pretty much confident with the situation that we're in right now, with the liquidity that we have, with the cash that we have and with the earnings recovery scenario that we see which is quite promising. And with asset rotation strategy that we put in place to prepare for a worst case scenario, I think we -- we're confident that we will pull through.

Just a follow-up on that, there's a question on asset rotation. So will we have asset rotation in the fourth quarter or into next year? And is it going to be a higher valuation as recovery is very strong?

Well, like I said, asset rotation is always on the card even before COVID. We will try to recycle our capital while maintaining the brand and enjoy partial earning contribution from such assets. But at the same time, being able to get the proceeds to manage our leverage and balance sheet. So as I said, we still have a number of assets in our portfolio if necessary or if needed, when situation requires, we'll look into it. But at this point, nothing that we can say or disclose at the moment.

Looking at the cash flow -- monthly cash flow, what were those in August and in September? Why we're -- sorry, why were those in August and September much lower than the preceding 2 months, even though RevPar seem to be better?

Well, for one asset rotation strategy, bringing more cash in July than other months and certain months working cap operations fluctuate. So you see cash flow from operation fluctuate as well. But -- all in all, we look at the whole quarter in some. It's improving over time compared with second quarter and first quarter of the year.

This is the last question we have. Any guidance on pre-TFRS EBITDA margin, assuming all cost control measures in effect on the full recovery to 2019 level sales on hotel side?

Well, I would say margin should improve. Like I said, as I emphasized earlier, we've been proactive in terms of rationalizing our costs structure and cost base as well as improved productivity and a lot of cost that has been cut some of them are permanent. So that will allow us to see if earnings or revenue recovery is coming, we will see higher operating leverage, and that probably improved our margins.

We have one more. As business is recovering, operating costs also rise. What do you expect the breakeven occupancy of the hotel business to be in 2022?

Well, as I said, if you look at Minor Hotels' portfolio, overall in the slide that we have before COVID is around 50% to 60% occupancy level. We brought it down to about 30% to 40% and but business recovery, I would say it's probably going to be somewhere between 40% to 60%. It's not going to be as high as what we saw before COVID, like 50%, 60%, anymore because of the cost rationalization that we have done. So it will be somewhere in between, I'll say, roughly like 50-ish.

It's a follow-on to that.

And that would be the slide that we show here. It's the breakeven at EBITDA pre-TFRS at the property level.

Would it be possible to quantify the amount of structural or permanent cost savings that we have taken?

Well, we have done the exercise and some of them we can distinguish or separate quite clearly, but a lot of them, it's hard to quantify whether it's permanent or it's temporary. Even that we have a number of cost items that we have and then some of the benefits coming in as intangible or qualitative benefits. So -- but we're definitely confident that we have -- we are going to see that benefit going forward, feed through to our margins and to our bottom line.

Can you update about hotel and food business in Thailand in the first half of November?

In the first half of November, well, in -- it's still too early to tell because, like I said, the bookings for hotels, now booking window is short and a lot of booking will come within the same month. So this is just like a half month past. So we would likely see November, December to be strong because of the festive season. And like I said, country reopening, we start to see tourists coming in and Thai Travel Together campaign of the government also encourages more domestic tourism. But in vaccination acceleration also make people comfortable in moving and going out of town this day compared with the previous month or 2. That altogether will help improve the outlook of November and December. For food, as I mentioned earlier, we've seen improvement in October. In September, it's still -- again, still too early to tell, but it's still same-store sales pretty much flat in November at this point. But like I said, we're going to have more marketing, promotional, new products launch over the upcoming weeks. So the number should improve on the back of that.

I think that was the last question. So this concludes our presentation. And if you have any other questions, please feel free to contact our IR team. We are more than happy to take them any time after this. And would like to request further response in our IR survey, which we'll be sending by next week. Thank you very much for today, and have a good day.