PT Lippo Karawaci Tbk (LPKR) Earnings Call Transcript & Summary

Hello, good afternoon, everyone. Please welcome equity investors, bond investors, regulators and credit rating agencies to PT Lippo Karawaci Tbk First Quarter 2025 Earnings Call. Today as a moderator, I'm Randi, the Head of Investor Relations. With me today, we have Pak Fendi Santoso as the Group CFO who will present our first quarter 2025 results, followed by question-and-answers. [Operator Instructions] Without further ado, please Pak Fendi to continue with the presentation. Thank you.

Thank you, Randi, and good afternoon, everyone. Thank you for joining our earnings call. Today, I will walk you through our first quarter 2025 performance at Lippo Karawaci Tbk. Let's just jump right in. And just an overview, Lippo participate as a leader in a fully integrated real estate operations. First quarter revenue, IDR 2 trillion. Our total assets for the first quarter was IDR 51 trillion and equity of IDR 31 trillion. We have a widespread presence across 56 cities and 26 provinces across Indonesia. We have three pillars of business: Real Estate, Lifestyle and lastly, Healthcare. Just on first quarter performance highlights. Overall, we've delivered a positive performance. We started with very good quarter this year. Our marketing sales in the first quarter reached IDR 1.26 trillion, which is about 20% of our full year target of IDR 6.25 trillion. Revenue grew by 39% year-on-year to 1.74% (sic) [ IDR 1.74 trillion ]. This is on the back of early handovers of our residential and commercial units, and EBITDA at IDR 321 billion. We've done a few launches in this quarter, which we will discuss a little bit later on the next few slides. And Lifestyle continued to perform relatively well, 13% year-on-year growth. EBITDA grew by 59% and this is mostly driven by our mall business. Footfall averaged about 11 million visitors per month, 8% increase with occupancy improving to 82%, up by 3 percentage points, and this is higher than the industry average of about 78%. Our hotel business, however, is facing a little bit of headwinds. And I will talk about this later in the next few slides. Healthcare. Siloam is still currently undergoing a limited review on their financials for the first quarter. And as such, they have yet to publish their first quarter results. So we will not be discussing Siloam’ at this call, but we will share the results once Siloam’ has published their first quarter results. Just on the overall revenue, EBITDA, we've booked IDR 2 trillion first quarter 2025. It is lower by -- lower compared to last year, but this is predominantly because of the deconsolidation of Siloam that happened mid last year. So if we were to compare this on a like-for-like basis, we've assumed that the first quarter 2024, Siloam weren't deconsolidated, then you're actually looking at about 31% increase on the revenue, and this is predominantly driven by our real estate development, which grew by 39% and this is on the back of a much faster handover both in Karawaci and Cikarang with our outperformance in Cendana Essence project as well as a stronger performance from our TMD business. On the EBITDA, on a like-for-like comparison, it's down slightly by 5%, and this is predominantly because of our real estate development, margin has come down because of a different product mix, not only because of a lower margin that we handed over for the first quarter, but then because of the larger land swaps that we've sold last year, which is, I think, amounting to [ about IDR 425 billion ] in the first quarter of 2024 versus IDR 18 billion that we've sold this year. This is the consolidated P&L. Obviously, we'll talk about revenue and EBITDA. This is predominantly down because of the deconsolidation of Siloam. But if we were to do a comparison for like-for-like, we are actually up on revenue by 31%. On the underlying NPAT, we are doing slightly better than last year at IDR 208 billion, 2% higher than last year. And this is on the back of a lower interest expense on the back of our liability management initiatives that we've done over the last few years. So that contributed to a lower net interest margins. After we've taken out nonoperational and one-off items, we arrived at a bottom line of IDR 169 billion profit this quarter, and this is compared to a loss of IDR 179 billion on the last quarter. So it's a significant improvement on our bottom line. On the cash position, liquidity, we remain pretty healthy. We start at IDR 5.3 trillion. We've ended the first quarter 2025 at IDR 2.7 trillion. The majority of the cash was used to pay down debt amounting to IDR 1.865 trillion in total. This is also one of the payments -- the debt payment that we made was towards the bonds, the remaining last U.S. dollar bonds that we have amounting to IDR 1 trillion or USD 63.7 million. So we now today have zero U.S. dollar-denominated liabilities. So all our liabilities, debt liabilities are in rupiah. So we've pretty much eliminated the risk of FX mismatch in our business. And as such, we're fully aligned both on revenue and as well as our liabilities from a currency standpoint. We have ended the net debt at IDR 1.9 trillion in the end of March 2025. So moving on to just the business highlight for the real estate project development sold in first quarter, we've done 18 projects that we sold on the landed residential, on the low to high rise total of 6 projects and then shophouses of 8 projects. We talked about marketing sales, IDR 1.26 trillion in the first quarter, 20% of what we targeted for this year. We've made two launches in the first quarter, one is at Lippo Karawaci Park Serpong Phase 4. We did this in March 2025. Tanjung Bunga, Makassar has launched our premium product, Blackslate, received a lot of traction in Makassar, which is something that we are very excited about. The financial performance will also touch base on this, IDR 1.74 trillion, 39% increase from last year. Gross profit improved to IDR 577 billion in the first quarter. EBITDA of IDR 321 billion and 18% EBITDA margin. So moving forward, continue with offering a diverse range of homes and focusing more on the affordable housing. This is just to show you a trend on the marketing sales. Last year, we did IDR 6 trillion and this year, we are targeting IDR 6.25 trillion, which is growth of 20%. The majority of this is coming out of LK residential and secondly, Lippo Cikarang development. And we still have a lot of land bank that we can compensate moving forward. To give you a highlight on the breakdown of our marketing sales. In Lippo Karawaci, 88% of the marketing sales are landed housing and followed by 8% shophouses. In Lippo Cikarang, [Audio Gap] and 33% are commercial area. In terms of payments still dominated by mortgage 72% and installment saw a slight increase to 16%, the installments to the developers with a price point of -- they're dominated by less than IDR 1 billion, amounting to about 76% of the total marketing sales that we made in the first quarter. This is just to give you a picture to project handover that we did in the first quarter. We did some in Park Serpong 154 units, 30% completed, in Lippo Village, Cendana Cove, The Hive @Parc Two which is sort of half did, Cendana Essence Site A Area 1 and 2, Cendana Cove, Cendana Arbory and Cendana Gardn Britania. In Cikarang, we handed over two projects, one in Waterfront Estates and Tanamera Shophouses. This is just to give an idea on the product innovation that we recently launched both in our new launch in the first quarter of the Blackslate Homes, which is -- and the Blackstar Homes, which is more high-end premium products with a price point of IDR 1.8 billion to IDR 2 billion with an area of 125 to 130 square meters and also the Cendana Series, Cendana Suites and Cendana Grand Suites, which is more a mid-tier product with price point around IDR 1 billion to IDR 1.1 billion with a size of about 80 to 90 square meters. This is the photo from our last launches. Park Serpong, like I mentioned, with the title of Fantastic Four, we did in March 2025, take-up rate of 96% of the [indiscernible]. Tanjung Bunga we did this also in the same day in March, a take-up rate of about 88%. So it's pretty successful launches. Lifestyle in the mall business, we've currently operated 59 malls nationwide in 39 cities with a total net leasable area of 2.5 million square meters with a very well diverse tenant mix. Revenue increased by 30% in the first quarter compared to last year at IDR 184 billion with EBITDA of IDR 50 billion. Margins remain pretty healthy at 27%. We are seeing the mall visitors coming up by 8% compared to last year and also occupancy rate improving to 82%. And as I mentioned, this is higher than the industry average of 78% that we are getting from the industry report. Lippo Mall Nusantara continue to perform well. This is the mall that we spent asset enhancement initiative. It's performing well, and we have yet to do the grand launching. It will happen in August, but it's -- continuously we continue to open up more levels. I think the completion will probably be done by July and with the grand launch in the next month in August. So this is one area that we've opened up, the Alun-Alun Nusantara which we've collaborated with Bank Mandiri doing co-branding of this space. We call it Livin' Alun-Alun Nusantara. I would encourage everyone to come to see this mall. This is located pretty close by in the Central Business District of Jakarta, and this is by the juncture of Semanggi intersection. We are also improving our malls and changing it into a more entertainment center. I think in the past, it was more towards shopping and then more for -- and then evolved towards more F&B, but we are seeing a trend of consumer expecting to enjoy entertainment more. As such, we are shifting this tenant mix more towards entertainment. So we've invited [indiscernible] to work closely with us on these efforts. And this is one of the reasons why we are able to improve our tenancy ratio, occupancy ratios as well as physical traffic. And as such, you can see here, that we've reduced down our tenants from the previous anchor tenant of supermarkets to more towards the entertainment business. Hotels, we manage about 9 hotels and 6 leisure places. This year, hotel business generally has been facing headwinds given the spending cut by the government, I think amounting to about IDR 300 trillion that the government has introduced to state. And this is resulting in a lower banquet business and lower occupancy rate for hotels that have been enjoying governmental business for meetings and so on and so forth. So we are seeing this trend across all the hotel industry. We are also seeing this for hotel business that's been enjoying a lot of events from government. So -- but we see a lot of opportunities in more -- in the hotels that are seeing more tourists like in Bali. And as such, we have continued to push growth from that particular pockets of business. As you see in the results, our revenue comes down slightly by 3%, EBITDA down by 21%. Occupancy rate comes down from 58% last year to 54% this year. That being said, we managed to improve our average room rate from IDR 569,000 (sic) [ IDR 596,000 ] to IDR 640,000, up by 8% as we see a lot of demand for our hotel has been done -- we have completed renovations that we've done in the last few months. So that's all on the business highlights. I think looking forward, we will continue to focus on growing three of our business pillars. On Real Estate, we will continue to focus on delivering affordable housing across all our real estate development, either in Lippo Karawaci, Cikarang or Park Serpong. On marketing sales, we are still aiming for IDR 6.25 trillion. I think we are on track to achieving this. I think this is something that we believe that we will be able to deliver by end of the year. On Lifestyle, our malls are going to be at the forefront of our Lifestyle business. This year, we'll continue to invest on asset enhancements, renovations in our key strategic malls. Alun-Alun Nusantara or Lippo Mall Nusantara is one of the mall -- one of the tipping points that we want to replicate the success across all our other malls. On Healthcare, we continue to see a lot of demand and growth opportunities. I think we are pretty on track with what we planned for the year. That's all from my end. I'll pass it back to Randi for Q&A session.

[Operator Instructions].

Okay. If not, then probably we can close this earnings call, Randi.

Thank you, Pak Fendi. And then thank you for the participants attending the Lippo Karawaci First Quarter 2025 Earnings Call. We will share the material after the call. See you again in our first half 2025 earnings call. Have a good day, everyone. Bye-bye.

Thank you, everyone. Have a good day ahead.