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

Good morning, and welcome to Rabbit Holdings Third Quarter 2024 Analyst Meeting. [Operator Instructions] As usual, today, we are joined by the Acting CEO and CFO, Ms. Soraya Satiangoset.

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And the IR team. [Foreign Language]

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So let's get started. Moving towards the third quarter of 2024, the company recorded total revenues of THB 1.4 billion, up by 12% year-over-year, contributed by the real estate business with revenues of THB 1 billion and financial services up by 5% year-over-year to THB 291 million. Additionally, the company recorded a return of share of profit of THB 188 million this quarter. All in all, the company recorded a net loss of THB 707 million for the third quarter of 2024. Moving on to the real estate divestment plan. From the previous years, the company had divested its real estate assets totaling approximately THB 6 billion, comprising of its European hotel portfolios and the sales of its real estate joint venture projects and various land plots. This year, the company had divested an office building at a transaction value of THB 1 billion. Looking ahead, the company aims to complete the divestment of nearly all of its remaining real estate assets by 2026. The total divestment is expected to yield approximately THB 23 billion in total, which will be used to strengthen and expand the growth of its financial services. Moving on to the significant events of the third quarter. And the first one is the -- you could see the results of the 7 -- sixth and seventh RABBIT-P conversions were already completed, where a total of approximately 38 million RABBIT-P shares were converted to RABBIT shares. As of September 2024, RABBIT (sic) [ RABBIT-P ] shares were 24.3 billion outstanding shares and RABBIT shares of 7.4 billion shares outstanding. The second significant event for this quarter, BTS Group announced on the 2nd of August that it tends to acquire additional shares of Rabbit Holdings as part of a voluntary tender offer at the offering price of THB 0.6 per share for both RABBIT ordinary and preferred shares. The transaction is part of the group's restructuring of its subsidiaries and associated companies. The third significant event is the voluntary tender offer results. On 7th November, the company reported the results of the VTO, where BTS Group's shareholding in Rabbit Holdings increased from 47% to 65%, changing Rabbit Holdings' status as an associate company to become a BTS Group's subsidiary. The last significant event is the disposal of assets. Lastly, on 6th November, the company had disposed of its shares in Unison One, which comprises of a land and building at a transaction value of THB 1 billion as part of its exit strategy from the real estate business. Moving on to the financial performance of 2023 -- on the third quarter. The company recorded total revenue of THB 1.4 billion, up by 12% year-over-year owed to its real estate property business accounting for 76% of the total revenue with a return to share of profit of THB 188 million compared to a net loss of THB 58 million in the quarter of 2023 last year. However, despite the positive improvements, expenses and finance costs increased, resulting in the company having to book a net loss of THB 707 million in the third quarter of 2024. Towards your right-hand side, you will see the total revenue contribution divided by segment consists of real estate accounting for 76%, financial services at 21% and others at 3%. Moving on to the financial performance analysis. From the waterfall chart on your far left, the total revenue -- operating revenue was THB 1.2 billion, increasing by 12% year-over-year, attributed to the higher hotel operations owed to the recovery of tourism sector and the hotel rental business from the leasing of its European hotel properties. However, this was offset by exchange loss of THB 408 million from the Thai baht appreciation. And finance costs from domestic and overseas operations amounted to a total of THB 278 million. Further down the chart, the company recorded a strong share of profit for this quarter majorly contributed by the JV project with Sansiri of THB 202 million and from the transfer of the condominium units and THB 20 million from Metha, our wealth management business. After accounting for these factors, the company reported a net loss of THB 707 million for the third quarter of 2024. Moving on to the financial position. The balance sheet for the third quarter of 2024 decreased by 0.2% to THB 62 million from December last year. The decline was from a decrease in investment properties, partially offset by cash and cash equivalents of THB 394 million. Moving on to the liabilities. The total liabilities increased by 4.1% to THB 30 billion this quarter, stemming from short-term loans from financial institutions. Going to the cash flow, the ending cash was THB 2 billion, increasing by THB 394 million at the beginning of the year, attributed to net cash from operating activities of THB 240 million, net cash from investing activities of THB 3 million and cash from financing of THB 200 million. Moving on to CapEx and property investments. This -- for this quarter, the company reported the CapEx of THB 621 million for purchases in property, plant and equipment as well as other investments. Lastly, for the debt structure, as of the third quarter of 2024, the company has a total outstanding debt of THB 18 billion and on the right-hand side displays the breakdown by currency, which Thai baht is equivalent to 82%, and the remaining accounts for 18% of euros. For the portion of our breakdown interest, floating rate was 91%, while fixed was at 9%. On the bottom, the company has a total interest-bearing debt of THB 18.9 billion for the third quarter of 2024, while the net interest-bearing debt to equity ratio was 0.51x, slight increase from 0.50x at the end of 2023 last year. Moving on to the operational side. First up is the financial services under Rabbit Life. In this quarter, Rabbit Life ranked at #4 in terms of market share, in terms of new business premium sales via digital platform and remained at #16 in market share in terms of total premiums. For 2024, Rabbit Life has set new targets to a total gross premium of THB 2.8 billion. And for the first 9 months of 2024, it already brought in THB 1.7 billion or 62% of its intended targets already. Another goal for Rabbit Life is to recruit another additional 1,000 agents by the year end of 2024. For this quarter, Rabbit Life had launched a new rebranding campaign in video, showcasing 4 of its most popularized insurance products, which include Health Smile, a health insurance product; BumnarmMungme8555 Plus, a pension insurance; Jai Jai 25/9, a life/investment-linked insurance product; and the Hero 10/3, an investment-linked insurance. Towards the right-hand side, you'll see Rabbit Life's yearly outlook for -- the first one is the sales and products. Rabbit Life expects a surge in activity during the tax season, leveraging targeted campaigns to boost its sales. For investments, Rabbit Life anticipates interest rate drops, which allows the company to manage its investments strategically and effectively. The third one is the operations IT where Rabbit Life has continuously improved to enhance the online tracking features to provide a user-friendly experience for its clients. And lastly, under others, Rabbit Life has launched the new campaign video to capitalize on the tax season, spotlighting Rabbit Life's unique offerings to attract new clients. Moving on to the revenue breakdown for this quarter under Rabbit Life. The insurance segment brought in a total revenue of THB 256 million. And the breakdown consists of premiums earned at THB 157 million, investment income and others at THB 99 million. Right below, you'll see a year-over-year comparison exhibits that the premiums decreased by 17% year-over-year to THB 157 million. The breakdown consists of premium types consisting of first year premiums decreasing by THB 69 million, meanwhile, renewal premiums decreased by 5% to THB 79 million. On the right-hand side, you see the breakdown comparison by channel type shows that Rabbit Life's overall premiums by channel decreased due to lower sales activity compared to the third quarter of last year in 2023. However, the decrease in premiums was offset by a substantial increase of 45% in interest investment income rising to THB 99 million this quarter. Moving on to the second part of our financial services under NPL and NPA portfolio. As of the third quarter of 2024, Prime Zone joined the NPL auction and acquired new portfolios with a principal balance of THB 63 million, now bringing its total portfolio value at THB 1.7 billion and at the total acquisition cost of THB 1 billion. Towards the right-hand side, you'll see that Prime Zone's NPA portfolio consists of 20 assets at a total cost of approximately THB 72 million. Lastly, for our financial services under Metha management. For the third quarter of 2024, Metha achieved robust operational results from improved fees across several of its key client portfolios, which contributed a share of profit to 20 -- pardon me, a share of profit of THB 20 million for Rabbit Holdings. Additionally, Metha had already exceeded its year-end target of achieving THB 10 billion in assets under management and remains focused on expanding its fund management business, utilizing the group's 3M platform under the MATCH segment, driving growth through the sharing economy concept. Now I'd like to hand over to my colleague, who will take you through the real estate portion of our business. Thank you.

Thank you, [indiscernible], and good morning, everyone. We are moving to the real estate business segment. In terms of operational key in this year, there were 1,692 and 127 keys for owned hotel and operating leased hotel, respectively. Therefore, the total operational keys were 1,819 keys. For this year, the hotel segment revenue was THB 752 million, increasing 23% year-on-year mainly due to the recovery of tourism sector. [indiscernible] of revenue breakdown in third quarter '24, the owned hotel and operating leased hotel grew 93% and 7%, 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 hotel in Thailand, total revenue was THB 608 million, comprising of THB 556 million from owned hotel and THB 52 million from operating leased hotel. Gross operating profit margin was 40%, increasing from 33% year-on-year. However, occupancy rate increased to 78% in third quarter '24 compared to 70% in third quarter '23, outperformed the overall industry occupancy rates in Thailand at 67%, which decreased from the last quarter. For hotels in Europe, total revenue was THB 143 million, increasing from THB 120 million year-on-year despite the divestment of hotel in Europe. Gross operating profit margin was 46%. The occupancy rates increased to 69% due to seasonality trends in line with the European markets with the improvement of average daily rate at THB 4,191. Our owned hotel portfolio consists of 7 owned and partially leased hotels and 2 operating leased hotels. For rental segment, this segment comprises of our office buildings located in London, the 33 Gracechurch and Noble Commercial Building, TST Tower and Unicorn in Bangkok. Apart from office buildings, we have commercial buildings under the rental business. Therefore, the overall net floor area is 51,603 square meter with overall occupancy rate at 55%. Right-hand side, the overall breakdown of revenue by office building amounted to THB 80 million in this quarter. Additionally, our owned European hotels have been changed to operating leased from the partial disposal [indiscernible] forward that can expect to receive a rental fee of around THB 666 million per year. On the residential segment, this quarter under JV with Sansiri, there is currently condominium project on sale and ready to move in, the LINE Vibe whereas one more project is clearly in the development phase, which is the LINE Sathorn. Total presales backlog amounted to THB 627 million. And in this year, the presales backlog amounted to THB 240 million solely from the LINE Vibe. For our projects under construction, first, the Langham Custom House, Bangkok, luxurious 5-star hotel project in a rare, historic, colonial-era heritage building around the Chao Phraya Riverside. This project consists of 8,240 square meter with 14% (sic) [ 40% ] progress of construction. The second, RESIDENCES 38, an upscale residential project located in Bangkok Thonglor district, Sukhumvit 38. This building consists of 36 floors with 66% progress of construction, which is a combination of serviced apartments, residential condominium, F&B retail stores in 29,932 square meters gross floor area, expected period of completion by 2025. So there are our updates of Rabbit Holdings for analyst meeting in third quarter 2024. Thank you.