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

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

[Foreign Language]

And the IR team. [Foreign Language]

So let's get started. Moving towards the fiscal year of 2024. The company recorded total revenues of THB 5.9 billion, up 11% year-over-year with an EBITDA of THB 801 million and a turnaround to share of profit of THB 236 million. All in all, the company reported a net loss for the fiscal year at THB 1.2 billion. Moving to the real estate divestment portion from the period 2021 to 2024, the company has divested its real estate assets totaling approximately THB 7 billion, comprising of its European hotel portfolios and the sale of its real estate joint venture projects. This year in 2025, the company plans to divest additional real estate properties at the transaction value of THB 2 billion. Looking ahead, the company aims to complete the divestment of nearly all its remaining real estate assets by 2026, and the total divestment is expected to yield approximately THB 23 billion in total. For the significant events portion of the fiscal year, the first significant event is the conversion of the RABBIT-P shares where there are a total of approximately 34.4 million RABBIT-P shares, which were converted to RABBIT shares. As of date, RABBIT-P shares accounted for 24.3 billion [ assigned ] shares and RABBIT shares at 7.5 billion shares outstanding. The second and third significant events relate to BTS Group's strategic move to increase its ownership in Rabbit Holdings. BTS Group announced its intention to acquire additional shares of Rabbit Holdings at the offering price of THB 0.6 per share for both Rabbit ordinary and Rabbit preferred shares. This transaction is a key step into the group's restructuring of its subsidiaries and associate companies. By November 7, the company reported the results of the VTO revealing that BTS Group's shareholding in RABBIT had increased from 47% to 65%, thereby transitioning Rabbit Holdings from an associate company to a subsidiary of the group. And finally, the last event is the brief rundown on the key transactions with regard to the disposal of shares/assets that occurred during the fiscal year. The first one is the company sold an overseas hotel under the Vienna House brand for a total price of THB 323 million. The second is the disposal of its shares in AHS and AHSHK, which represent 40% and 9.8% of the hotel management platform, respectively, for a total price of THB 228 million. Lastly, the disposal of 100% shares in Unison One, which included both land and building assets in Bangkok. As mentioned in the previous slide, this is a summary of the VTO transaction that occurred during the fiscal year of 2024. BTS Group announced its intention to acquire additional shares in RABBIT through a VTO offer at the price of THB 0.6 per share. And prior to the VTO announcement, BTS Group has had held 47.7% shares in RABBIT, a combination of both Rabbit ordinary and RABBIT-P preferred shares, making Rabbit Holdings an associate company of the group. Fast forward to 31st October 2024, upon conclusion of the VTO transaction, BTS Group had acquired an additional 20.8 billion shares in both RABBIT and RABBIT-P. As a result, the group's shareholding structure increased by 18% reaching a total of 65%, reclassifying Rabbit Holdings from an associate to a subsidiary of the group. Now moving to the financial performance of the fiscal year. In the fiscal year, the company reported total revenue of THB 5.9 billion, representing an 11% increase year-over-year, primarily driven by its real estate property business, which accounted for 72% of total revenue. Operating revenue grew by 24% year-over-year with EBITDA reaching THB 801 million. Additionally, the company reported a share of profit of THB 236 million, a significant turnaround from the share of loss of THB [ 1.0 ] billion reported last year. With this turnaround, the company reported a narrower net loss of THB 1.2 billion compared to the substantial loss of THB 4.3 billion in 2023 last year. Towards your right-hand side, you can see the total revenue contribution divided by segment. Real estate accounted for 72%, as previously mentioned, financial services at 20%, whereas others contributed 8% of total revenue. Moving to the performance analysis of the fiscal year 2024. From the waterfall chart on your far left, total operating revenue was THB 4.9 billion, increasing by 24% year-over-year, attributed to higher hotels, operations owed to the recovery of tourism sector and the hotel rental business from the leasing of its European hotel properties. Further down the chart, this was offset by finance costs of THB 1.1 billion, mainly from the company's domestic hotel operations, coupled with a share of profit of THB 236 million, mainly from the joint venture projects of series condominium unit transfers, increase in interest income of THB [ 445 ] million and a gain on sale from the disposal of the shares in Unison One at THB 268 million. After accounting for all these factors, the company reported a net loss of THB 1.2 billion, an improvement over the net loss of THB 4.3 billion in 2023, mainly due to no recognition of impairment on investments in SINGER. Speaking of impairments, as presented in the fiscal year, there was no recognition of impairment on investments this year in 2024, marking a significant turnaround from last year. The total impairment and write-offs recorded in this fiscal year stood at THB 163 million, an overall improvement compared to the substantial THB 3.5 billion recorded in 2023 last year. The reduction in impairment costs was a key factor in narrowing down the company's net loss to THB 1.2 billion, a notable improvement from THB 4.3 billion net loss in the previous year. Moving to the financial position and cash flow of the year. The balance sheet for the fiscal year decreased by 0.8% to THB 62 billion from December last year. The decline was from a decrease in the investment properties of THB 1.7 billion, partially offset by cash and cash equivalents of THB 974 million, whereas total liabilities increased by 4.7% to THB 30 billion, stemming from increased short-term loans from financial institutions. For the cash flow of the fiscal year, ending cash was THB 2.6 billion, increasing by THB 975 million at the beginning of the year, attributed to net cash from operating activities of THB 497 million, net cash used from investing activities of THB 768 million and net cash used in financing activities of THB 323 million. Lastly, moving on to the CapEx and investments. The company recorded a CapEx of THB 992 (sic) [ 922 ] million for the purchases in PPE as well as other investments. Moving on to the debt structure and key ratios of the year. The company has a total outstanding debt at 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% in euros. For the portion of our breakdown interest, floating rate was 93%, while fixed was 7%. On the bottom, the company has a total interest-bearing debt of THB 18 billion for the fiscal year with net interest-bearing debt-to-equity ratio at 0.47x, decreasing from 0.50x at the end of 2023 last year. Moving on to the operational updates for the year. In 2024, Rabbit Life had made significant progress towards its growth objectives. The company was close to achieving its target of THB 2.8 billion in total gross premiums, reaching THB 2.6 billion or 92% of its goal. This was driven by continuous expansion efforts, including the recruitment of 854 agents to strengthen its distribution network. Rabbit Life also maintained a strong position in the digital insurance space, ranking at #4 in market share for new business premium sales via digital platforms. Meanwhile, in total premiums, the company held the #16 market position, reflecting steady progress in building its broader market presence. For the revenue breakdown of the fiscal year, the insurance segment bought in a total of THB 1 billion and the breakdown consisted of premiums earned amounted to THB 720 million and income -- investment income and others registered at THB 320 million. A year-over-year comparison below exhibits that premiums earned slightly increased to THB 720 million. The breakdown comparison by premium types consisted of single premiums growing by 78% to THB 66 million. Renewal premiums also grew by 4% to THB 372 million in 2024, whereas first year's premiums dropped by 12% to THB 282 million due to the decline of agency sales. On the top right, you can see that the investment income increased by THB 44 million, a growth of 16% year-over-year, contributed by higher interest income from debentures. Moving down to the expenses line. In the fiscal year 2024, Rabbit Life reported a net loss of THB 1 billion, primarily driven by a 177% year-over-year increase in expenses, which totaled to THB 2.1 billion. The sharp rise in expenses was mainly to higher reserves attributed to the lapse policy, which led to a reversal in reserves being recognized as expenses or THB 1.8 billion, a majority chunk of the THB 2.1 billion. Lower sales of long-term insurance contracts and implying overall premium -- pardon me, impacting overall premium growth. As shown in the expenses breakdown, these factors collectively put pressure on Rabbit Life's bottom line. However, the company has been proactively addressing these challenges and key initiatives include expanding its agency force, enhancing training programs and implementing performance-driven structures to strengthen the brand royalties and foster a service-minded culture. With these strategic efforts in place, Rabbit Life expects to stabilize performance and drive improvements in 2025. Lastly, for the year-end, Rabbit Life had launched a new marketing campaign under Pooh Chai Rang Nguern showcasing 4 of its popularized insurance products, which include Health Smile, a health insurance product, Bumnarm Mungme B555 plus, a pension insurance, Jai Jai 25/9, a life investment-linked insurance, Hero10/3, an investment-linked insurance. Towards your right, Rabbit Life's first quarter of 2025 outlook included 4 phases. The first one includes the sales and products. Rabbit Life plans to launch new products under 99/1 and 99/2, a whole life insurance program. The second one is the investments. Anticipated interest rates are expected to drop, allowing Rabbit Life to manage its investments strategically and effectively. The third, operations and IT, continuous improvements have been enhanced to track online features to provide user-friendly experience for its customers. Lastly, under others, Rabbit Life has planned to launch more loyalty programs through the Rabbit Rewards application to synergize with BTS Group's 3M platform. Now I'd like to hand over to my colleague, [indiscernible] who will take you through the rest of the presentation. Thank you.

Thank you, [indiscernible], and good morning, everyone. We are moving to the asset management business. As of fiscal year, comes on [indiscernible] the NPL [ auction ] and acquiring new portfolios with the principal balance of THB 208 million, now bringing its total NPL portfolio valued at THB 1.9 billion at the total acquisition cost of THB 1.1 billion. Overall performance-wise, from [ Sukhumvit ] revenue from its NPL and NPA management business of THB 131 million, increasing by 212% year-over-year and record its total cash collection in the amount of THB 120 million. Towards the right-hand side of the slide, [ consol ] NPA portfolio consists of 22 assets at a total cost of approximately THB 77 million. For the end of 2024, Metha achieved robust operational results from improved performance and management fees across several of its key client portfolios, which contribute a share of profit of THB 54 million for Rabbit Holdings. Additionally, Metha has already exceeded its year-end target of reaching THB 10 billion in assets under management and remains focused on expanding its fund management business, utilizing the group 3M platform under the Metha platform, driving the growth through the Sharing Economy concept. Moving to hotel segment. In terms of operational keys in 2024, there were 1,692 and 127 keys for owned hotel and operating leased hotels, respectively. Therefore, the total operational keys were 1,819 keys. For fiscal year, the hotel segment revenue was THB 2.8 billion, increasing by 43% year-over-year, mainly due to the recovery of Thailand tourism sector. In part of revenue breakdown in 2024, the owned hotel and operating leased hotel were 92% and 8%, respectively. Apart from 1,819 keys of owned and operating leased hotel, there are 78 pending keys, so the total keys are 1,897 keys. For hotel in Thailand, in fourth quarter 2024, total revenue was THB 701 million, comprising of THB 637 million from owned hotel and THB 64 million from operating leased hotel. So gross operating profit margin is 45%, increasing from 40% year-over-year. Our occupancy rate increased to 80% in fourth quarter '24 compared to 72% in fourth quarter '23, outperformed the overall industry occupancy rates within Thailand at 75%, which increased from last quarter. For hotels in [ euro ] in fourth quarter 2024, total revenue was THB 71 million, decreasing from THB 75 million year-over-year despite the divestment of hotel in [ euro ], so gross operating profit margin was 14%. The occupancy rate decreased to 45% due to the seasonality trends in line with the European markets with lower average daily rate at THB 2,800. Therefore, our hotel portfolio consists of 7 owned and financial lease hotels and 2 operating lease hotels. For the rental segment, this segment comprises of our office building include 33 Gracechurch, located in London, and the Unicorn in Bangkok. The second is commercial building under Noble Commercial building. Therefore, the overall net floor area is 35,478 square meters, decreasing from [ 51,600 ] square meters due to the disposal of TST Tower. The overall occupancy rate stood at 50%. On the right hand side, the overall breakdown of revenue by office building amounted to THB 71 million in this quarter. Additionally, our own European hotels have been [ shown ] to operating lease from the partial disposal of our overseas hotel. And going forward, that can expect to receive a rental fee of around THB 666 million per year. For 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 currently in the development phase, which is the THE LINE SATHORN. And in this year, the presales backlog amounted to THB 153 million solely from THE LINE VIBE. For our projects under construction, the Langham Custom House, Bangkok, luxurious 5-star hotel project in a rare, historic, colonial era heritage building along the Chao Praya Riverside. This project consists of 8,240 square meters with 47% progress of construction. The second project is the RESIDENCES 38, an upscale residential project located in Bangkok Thonglor District, Sukhumvit 38. This building consists of 36 floors with 77% of construction, which is a combination of serviced apartments, residential condominium and F&B retail store include 29,932 square meters across floor area. Expected period completion by July 2025. So these are our update of Rabbit Holding for analyst meeting in this fiscal year.