Rabbit Holdings Public Company Limited (RABBIT) Earnings Call Transcript & Summary

Good morning, and welcome to Rabbit Holdings First Quarter of 2024 Analyst Meeting. Before we commence, please make sure your microphones and cameras are turned off, and please hold all questions at the end of the session. As usual, today, we are joined by the acting CEO and CFO, Ms. Soraya Satiangoset.

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And the IR team.

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So let's get started for the first quarter of 2024. Moving towards the first quarter of '24, the company reported a total revenue of THB 1.6 billion, up by 49% year-over-year, with EBITDA at THB 406 million, increasing by 24% year-over-year. However, the company reported a net loss of THB 231 million, which will be explained in the coming slides. Again, just a refresher on the company's current financial service business, which now includes life insurance business under Rabbit Life, where Rabbit Holdings invested 75% back in 2021; other investments, in both Singer and Jay Mart; NPL and NPA Asset Management business under Prime Zone Asset Management business and the latest acquisition, which was done last year, of Metha Asset Management, which is a private fund where the company holds a [ 50% ] investment stake. An update on the company's business transformation in the last 3 years. The company successfully divested its real estate assets, totaling approximately THB 6 billion, comprising of its European hotel portfolios and sale of its real estate joint venture projects. For this year, the company will continue to pursue its divestment plans, aiming to dispose of its remaining real estate projects forecasted at THB 70 billion. Additionally, by 2026, the company aims to dispose of almost all of its remaining real estate portfolios, estimated it would bring in total net proceeds of THB 31 billion, which will be used to strengthen and expand the growth of our financial services businesses. For the first quarter of '24 significant events, on your far left-hand side, the 4th and 5th RABBIT-P conversions were already completed, where a total of approximately 544 million RABBIT-P shares were converted to RABBIT shares. As of April '24, RABBIT-P shares were 24.3 billion outstanding shares and RABBIT shares at 7.4 billion shares outstanding. On the right-hand side, in February '24, the company entered into a share and sales purchase agreement for the disposal of single shares valued at THB 3.8 billion -- THB 3.9 billion, pardon me, within a 3-year period completion date. Lastly, in April 2024, the AGM was held at the Eastin Grand Phayathai Hotel, where all the proposed agendas were approved by the shareholders in attendance. Now moving on to the financial performance of the first quarter of '24. Total revenues was THB 1.6 billion, which increased by 49% year-over-year, with SG&A increasing by 7% due to high hotel costs owed to the recovery of the tourism sector, with EBITDA at THB 406 million, an increase of 24% year-over-year. However, despite the revenue growth, the expenses contributed by higher cost of operations, insurance expenses and higher finance costs resulted in the net profit -- net loss of THB 231 billion in the first quarter of 2024. Towards the right-hand side, you can see the total revenue contribution divided by segment. Real estate accounted for 67% of total revenue. Financial services accounted for 13% and others at 20%. Moving on to the financial analysis. From the waterfall chart on your far left, the total operating revenue was THB 1.2 billion, increasing by 44% year-over-year, attributed to higher hotel operations owed to the recovery of the tourism sector. However, this was partially offset by lower insurance revenue of THB 28 billion or down by 14% year-over-year from the insurance business, which was affected by the lapses in renewal policy premiums. Moving down, you can see the share of loss for the first quarter of 2024, registered at THB 67 million contributed by Verso and the joint venture projects with SANSIRI. However, this was offset by revenue of THB 154 million from interest income and others. Lastly, this led to the company reporting a net loss of THB 231 million in the first quarter of '24. Moving on to the financial position. The balance sheet for the first quarter of '24 anticipates a 0.3% increase to THB 63 million from December last year. The increase is from cash and cash equivalents and investment properties. Right below, you can see the cash flow where the operating cash -- where the ending cash flow was THB 1.9 billion, pressured by CFO, which was THB 54 million; cash received from financing activities of THB 242; and cash from financing at THB 75 million. On to your right-hand side, you see the CapEx and property investment registered at THB 140 million for PPE and other investment incomes in other investments. Lastly, for the debt structure, the company has a total outstanding debt of THB 18 billion. And on the right-hand side is the breakdown by currency, which is Thai baht is equivalent to 78% and euros accounting for 22%. For the portion of breakdown interest, our floating rate was 93% and fixed was 7%. On the bottom, the company had a total interest-bearing debt of THB 19 billion in the first quarter of '24, decreasing by THB 44 million compared to the end of last year, whilst net interest to bearing debt equity ratio was 0.51x, an increase from 0.50x at the end of '23. Moving on to the operational updates for the financial services business. For the insurance business, in this quarter, Rabbit Life ranking at #1 in terms of market share, in terms of new business premium sales for our digital platforms and remains at #16 in market share in terms of total premiums for 2024. Rabbit Life has set new targets to reach total gross premium of THB 2.8 billion. And for this, for the first quarter alone, it has already achieved 20% of its intended target. In addition, Rabbit Life would also expand its agent base by another 100,000 agents by the end of 2024. Additionally, for this quarter, Rabbit Life launched a campaign under Rabbit Life MYRewards, in collaboration with Rabbit Rewards, where customers can receive Rabbit Rewards points for purchasing Rabbit Life insurance products. For every THB 250 on Rabbit Life's first year premiums, customers can receive 1 Rabbit point from the Rabbit Rewards application, where they can be exchanged for other F&B and lifestyle vouchers. Towards your right-hand side, Rabbit Life's second quarter '24 outlook comes in 4 phases. The first is the sales and products where Rabbit Life are currently working on new product expansions and other whole life products to reach new audiences and new projects. The second phase is investments. Rabbit Life welcomes a new fund management, where higher returns are expected despite the current headwinds of the high interest rates. The third phase are the operations and IT where our new online products are expected to launch in order to monetize Rabbit Life's look and simplify the user interface. Lastly, Rabbit Life will continue to pursue new subscription programs leveraging our BTS Group's 3M platforms, such as the ones on your left side, which is in celebration with Rabbit Life and Rabbit. For the revenue breakdown this quarter, the insurance segment was THB 126 billion, and the breakdown consisted of premiums earned amounting to THB 102 billion, investment and income and others registered at THB 74 million. Our year-over-year comparison below exhibits the premium types where first year premiums increased by 2.1% to THB 49 billion while renewal premiums decreased by 25% or THB 16 billion. Lastly, meanwhile, single premiums dropped by 78.3% to THB 5 million. This is due to the lower sales volume from the current low season of the insurance business. Meanwhile on the upper right-hand side, the investment income and others for this quarter grew slightly by 7% to THB 74 million. Moving on to the NPL and NPA managed business under Prime Zone. As of the first quarter of '24, Prime Zone's portfolio was valued at THB 1.5 billion, with a total acquisition cost of THB 876 million. For Prime Zone's performances in the first quarter of '24, they were THB 33 million in total revenue and reported a total cash collection from its NPL and NPA management business of THB 18 million. Further to this, Prime Zone also acquired 3 new additional NPAs to their portfolio, bringing their total NPA portfolio count to 22 at the total cost of THB 80 million. Lastly, for the asset management business under Metha, I'd like to also give you a short run-through again. As part of the company's expansion towards the financial services business, last year, in November '23, the company acquired a 50% stake in Metha Asset Management business, a private fund management company. Metha is a licensed asset management company based in Thailand, boasting over 20 years of experience within the Thai and global stock markets. With a diversified portfolio spanning over 100 companies, Metha has set an ambitious long-term goal of achieving THB 10 billion AUM within the coming years. As part of this business expansion, during the first quarter, Metha strategically capitalized on new opportunities by leveraging from Rabbit Holdings and BTS Group's 3M platform under the MATCH business. This will provide a synergistic avenue for growth through its affiliate networks of companies through the sharing economy concept where BTS Group provides a unique match solution to its partners, sharing access to both its MOVE network and its MIX network. Now I'd like to hand over to my colleague who will take you through the real estate section of the presentation.

Thank you, [indiscernible]. Now we are moving to the real estate segment. In terms of original keys in this year, there were 1,692 and 127 keys for all hotel and leased hotel, respectively. Therefore, the total operational keys were 1,819 keys, the decrease is mainly from disposal of EU hotel originals and disposal of our [indiscernible] platform under AHS. However, this was partially offset by the addition of the Eastin Grand Phayathai Hotel, which opened since second quarter 2023 under the Unicorn project. For this year, the hotel segment revenue was THB 668 million, increasing by 26% year-over-year, mainly due to the recovery of tourism sector. Our revenue breakdown in first quarter '24, the owned hotel and operating hotel were 91.1% and 8.9%, respectively. Apart from 1,819 keys of owned and operating leased hotels, there are 78 pending keys. So the total keys are 1,897 keys for hotels in Thailand. Total revenue was THB 606 million comprised of THB 547 million from owned hotel and THB 59 million from operating tease hotel. Gross operating profit margin is 42%, increasing from 38.3% quarter-over-quarter. The occupancy rates increased to 71 -- sorry, 79.1% in this quarter compared to 72.1% last quarter, outperformed the overall industry occupancy rate within Thailand, at 75%, which remains the same in last quarter. For hotels in Europe. Total revenue was THB 51 million, decreasing from THB 75 million quarter-over-quarter, mainly due to the divestment of hotels in Europe. So gross operating profit margin was minus 3.2%. The occupancy rates declined to 37.6% due to seasonality terms in line with the European market, with the average daily rate of THB 2,518. For the rental segment, this segment comprised of our office building located in London, such as the 33 Gracechurch and Noble Commercial Building; TST Tower in Bangkok and in addition, The Unicorn. Apart from office buildings, we have commercial building under the rental business. Additionally, our owned European hotels have been changed to operating leased from the [indiscernible] of our overseas hotels and going forward, can expect to receive a rental fee of around THB 66 million per year. The overall breakdown of revenue by office building amount to THB 87 million in this quarter, right below the company [indiscernible] the performance as part of office rental, meeting the overall net floor area to 51,603 square meter, with overall occupancy rate at 59.2%. For residential segment, this quarter, there are ready-to-move-in condominium projects under JV with SANSIRI, including THE LINE VIBE and THE LINE Phahonyothin Park, whereas one more project is clearly in the development phase, which is THE LINE SATHORN. Total presale backlog amount to THB 2.6 billion. And in this year, the presales backlog amount to THB 2.5 billion, solely from THE LINE VIBE. For this quarter, we have new projects update. First, The Langham Custom House, Bangkok, a luxurious 5-star hotel in a rare, historic, colonial-era heritage building along the Chao Phraya Riverside. This project cost of -- sorry, this project consists of 8,240 square meter, with 35% progress of construction, expected opening within 2025. And the second project is The Residences 38, an upscale residential project located in Bangkok's Thonglor district, Sukhumvit 38. This building consists of 37 floors, which is a combination of serviced apartments, a residential condominium and food and beverage retail stores, with the expected period completion by 2025. The project highlights are: Ananda Development has been appointed as developer to oversee the construction development and sales spending of the project, consisting of 37 floors: 11th floor for facility/amenity, including a gym and swimming pool; a retail floor from level 12, which will be operated and managed by Rabbit Holdings; starting from level 13 to 24 will be serviced apartments, which will be operated and managed by the Ascott under the name La Clef Bangkok, by The Crest Collection, marking the debut of The Crest Collection in Thailand; and from level 25 to 37th onwards will be the residential condominium under the name The Residences 38. So that is a total of 171 units: 115 units among them being serviced apartments and 56 units being condominium. The total project cost is THB 4.9 billion, with already THB 2.5 billion invested and additional THB 2.4 billion. Source of funds, a combination of bank loans and shareholder loans and cash cycle. The project time line below shows that we have started the redevelopment in the second quarter 2023 and fourth quarter 2023 sales and marketing announcements of the project. Lastly, the serviced apartment preopening is expected to launch by the first quarter of 2025. [Foreign Language]