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

Good afternoon, and welcome to Rabbit Holdings Second Quarter Analyst Meeting of 2025. As usual, we are joined today by the acting CEO and CFO, Ms. Soraya Satiangoset and IR team.

[Foreign Language]

Before we proceed, [Operator Instructions]. So let's proceed to the financial highlights of second quarter 2025. Rabbit Holding record a total revenue of THB 1.6 billion, increasing by 25% year-on-year with Financial Services revenue up 32% year-on-year. The company record an EBITDA at THB 608 million, up 24% year-on-year and a net loss of 57 million compared to a net loss of THB 39 million in second quarter 2024. As part of [indiscernible] ongoing journey to divest from its real estate asset and strengthen its financial services business. As of date, the company record a total of THB 11 billion, some of its already divested assets include European hotels, land banks in Thailand and office building in Thailand. The remaining THB 19 billion is expected to conclude within coming years, which will include the European Hotel portfolio and [indiscernible] office units within Thailand. In 2025, Rabbit Holdings recently divested 2 main transactions. First transaction is divestment of [indiscernible] EUR 67.5 million, sorry. The buyer is [ Hotel Diplomat s.r.o. ], which is a subsidiary hotel -- sorry, is a subsidiary under Czech Hotel Group and Morningston with over 20 years in managing and investing in hotels in Czech Republic, expected to complete this transaction within third quarter this year. Second transaction is divestment of [indiscernible] Asset Company Limited of 50% shares and existing shareholder loans amounted to THB 1,265 million. The buyer is Kingkaew Asset Company Limited, a subsidiary of BTS Group Holding Public Company Limited, expected to complete this transaction within fourth quarter this year. In addition, the company continues to execute its asset divestment strategy, including multiple commercial units in line with the planned time line. For the significant events portion, first event is the conversion of RABBIT-P shares to RABBIT shares. There were no common shares within the 9 and 10 conversion period. And as of second quarter of 2025, RABBIT-P share accounted for THB 24.3 million and RABBIT shares at THB 7.5 million. Second event is relocation to head office from TST Tower to BTS Visionary Park in July this year. Third event, Rabbit Holdings has its annual FY 2025 AGM on 28th April and [indiscernible] agenda, all proposed agendas were resolved. Moving to the last significant event, the company has successfully liquidated of U Hospitality Holding Mauritius on 9 June this year. For financial performance, the company record total revenues of THB 1.6 billion, increasing by 25% year-on-year due to revenue from sale of real estate of THB 262 million from the Residences 38 project and gains from foreign exchange rate of THB 67 million or 145% year-on-year. However, despite the increase, hotel operations were down 12% year-on-year to THB 558 million on to the decrease in international arrivals to Thailand and lower revenue from Rental segment of 8% year-on-year to THB 88 million from disposal of TST Tower office building in fourth quarter last year. Gross operating profit increased by 3% year-on-year to THB 713 million, and EBITDA increased by 24% year-on-year to THB 608 million. However, the company record share of loss of THB 89 million compared to the share of profit of THB 96 million in the second quarter last year. Overall, the company recorded a net loss of THB 57 million. Towards your right-hand side, you can see the total revenue contribution divided by segment. First, real estate accounted for 73%. Second, financial services contributed to 15%, whereas other contributed 12% of total revenue, including dividend, investment income and FX gains. For the waterfall chart on your far left, total operating revenue was THB 1.3 billion, increased primarily due to revenue from sale of real estate from the Residences 38 project and gain from foreign exchange rate. Further up the chart, this was offset by [indiscernible] cost of THB 283 million, mainly from domestic operation. The share of loss this quarter was THB 89 million compared to share of profit of THB 96 million in the same quarter last year and record interest income was THB 133 million. After accounting for this factor, the company reported a net loss of THB 57 million [indiscernible] from the net loss of THB 39 million year-on-year, mainly due to higher share of loss from investment in other JVs. Moving to the financial position. The balance sheet for second quarter 2025 shows the total asset at THB 62 billion increase from the December last year, mainly due to investment properties associated with FX translation adjustment of the European hotels and the record of renovation cost of an office building in London, the United Kingdom, along with property, plant and equipment from ongoing projects and real estate project under development, well as the cash flow from this quarter as of 30 June this year, ending cash at THB 2.2 billion with net cash from operating activity of THB 70 million. Net cash used in investing activity of THB 515 million, mainly from cash paid in investment property of THB 555 million. Net cash used financing activity of THB 118 million, mainly due to cash received from short-term loan of THB 515 million, offset by net repayment of long-term loan of THB 385 million. Moving on to CapEx and property investment. The company record CapEx and property investment of THB 640 million for purchase in property, plant equipment and invest in property related to the ongoing real estate projects. Lastly, for this quarter, the company has a total outstanding debt at THB 17.9 billion. And on the right-hand side, this the breakdown by currency, which Thai Baht is equivalent to 81% and the remaining accounts for EUR 18. For the portion of our breakdown interest, floating rate was 93%, which fixed was 9%. On the bottom, the company had a total interest-bearing debt of THB 18.8 billion for this quarter, slightly increasing by THB 330 million compared to the end of last year, with net interest [indiscernible] debt-to-equity ratio was 0.52x. Moving to operational updates. First, our financial services. For the insurance business, in this quarter, Rabbit Life remained at #4 of market share in terms of sales via digital platform and improved to rank #16 in market share in terms of premiums. As part of its strategy to strengthen competitiveness and accelerate growth, Rabbit Life has set an ambitious year-end target of achieving THB 2.6 billion in total gross premiums. As of the first half of this year, Rabbit Life had already achieved 50% or THB 1,303 million of total premiums already. Looking ahead, Rabbit Life strategy for the third quarter is built around 4 key focus areas. First, enhance of its sale and products by launching new product revamping existing ones and offering a bundled sale package. Second, investment anticipate a favorable environment of proactive portfolio rebalancing with continued focus on optimism, investment mix and managing risk. Third, operations and IT, new web-based and application to go live, bringing new functionality and consistency to quotation and selling process. And the last others, Rabbit Life is conducting our cross-BU selling with Rabbit Care and Rabbit Rewards. For the revenue breakdown this quarter, under the adoptions of TFRS 17, Rabbit Life are presented into 2 key components in the table. For the second quarter 2025, Rabbit Life reported insurance service result of THB 18 million, mainly due to higher performance through the agent and other channels and lower impact from the lapse policies. While finance results were THB 63 million, increasing 117% year-on-year due to a gain on sale of investment in financial assets. After accounting for other expenses, mainly from finance cost, Rabbit Life recorded net profit of THB 33 million turnaround from the net loss of THB 98 million in the same period last year. On your right-hand side, you will see the breakdown of total gross premium via selling channel. Total gross premiums increased 18% year-on-year to THB 830 million from stronger performance across agent and other channels, mainly from strengthening of agent team with high-quality resources and the expansion of agent branch office network. Rabbit Life has joined SahaGroup Fair & Fest 2025 and Money Expo 2025 Hatyai to boost visibility and strengthen its brand awareness as part of its marketing strategies and expand its customer base. During the event to in new customer Rabbit Life offer an exclusive promotion on site for new insurance policy brought at the event with limited addition Rabbit Life merchandise. This initiative has positioned the brand as a possible and contemporary brand within the life insurance space. Our next financial services is Pime Zone Asset Management. In this quarter, Pime Zone’s NPA portfolio consists of 23 assets at a total cost of THB 76 million, with each asset averaging at THB 3 million. In addition, Pime Zone joined the bidding process and acquire NPLs with a principal balance of THB 208 million towards the right-hand side, Pime Zone NPL portfolio is now valued at THB 1.9 billion, growing by 12% year-on-year with total collateral assets valued at THB 1.6 billion at a total acquisition cost of THB 1.1 billion. Performance-wise, the company recognized revenue from NPL and NPA management business of THB 36 million and record cash collection from its NPL portfolio in the amount of THB 41 million. Turning to our fund management business under Metha Asset Management, which continues to strengthen its role as a key contributor within Rabbit Holdings Financial Services platform after successful achieving its ambitious year-end target of THB 15 billion in AUM in 2024. On to strategic capital allocation and fund management capabilities, Metha has set a new goal of expanding its new milestone to expand its AUM to THB 18 billion. In terms of performance, Metha delivered solid return in the first half of 2025, generating THB 45 million in dividend income and recording a share of profit of THB 2 million in this quarter. We are moving to Section 3.2 real estate that comprises of Hospitality segment, Rental segment, Residential Projects and others under -- and projects under development. Let's start with hospitality overview in terms of operational keys in this quarter. There were 1,692 and 127 keys for owned and finance leased hotel and operating leased hotel, respectively. Therefore, the total operational keys were 1,819 keys. In this quarter, the Hotel segment generated revenue of THB 558 million, decreasing by 12% year-on-year, mainly due to the decline in international arrivals to Thailand. In part of revenue breakdown in this quarter, the owned and finance lease hotel and operating lease hotel were 92% and 8%, respectively, apart from 1,819 keys. There are 78 pending keys from The Langham, Custom House, Bangkok, so the total keys are 1,897 keys. For hotels in Thailand, in second quarter 2025, total revenue was THB 465 million, comprising of THB 422 million from owned and finance leased hotel and THB 43 million from operating leased hotel. Gross operating profit margin was 35%, decreasing from 37% year-on-year. Our occupancy rate decreased from 75% in second quarter 2024 to 66% due to the Thai Tourism Sector slowdown from safety concern and intensified regional competition. This leads to decrease in our key metrics that include ADR, occupancy rate and RevPAR. For hotel in J, in second quarter 2025, total revenue was THB 88 million, slightly decreasing from the same quarter last year with 55% of occupancy rate. As a result, gross operating profit margin was 25% and THB 3,100 of average daily rate. Let's move to the Rental segment that includes office, commercial unit and hotel. For Office segment, there are 3 office buildings with 35,000 square meters of net floor area, both overseas and in Thailand, including 33 [indiscernible] located in London, The Unicorn Phayathai, Bangkok and Noble Ploenchit, Bangkok. In terms of revenue on the right-hand side of the slide, Office segment generated THB 69 million, decreasing from THB 89 million due to the disposal of TST Tower office building. The overall occupancy rate stood at 58%. For commercial units, this segment comprises of condominium commercial unit across Bangkok, long-term lease buildings and commercial units in the Unicorn and the Area 22 with the overall net floor area of 22,000 square meters. Right-hand side is the performance of this segment, bringing revenue of THB 53 million with 99% of occupancy rate. The last segment for Rental is overseas hotels, which have been changed from owned to operating lease due to the partial disposal of hotels. And going forward, that can expect to receive rental fee of around THB 600 million to THB 700 million per year. As of this quarter, there are 15 European hotels remaining in Germany. On 14th August this year, we entered into an agreement to divest Vienna House, Wyndham, [indiscernible] Diplomat Prague, which has mentioned in asset divestment slide earlier. Next segment is residential projects. This quarter under JV with Sansiri, there is currently condominium project on sale and ready to move in THE LINE Vibe with 87% of the total units sold and presales backlog of THB 48 million in this quarter. Furthermore, one project currently under construction in THE LINE Sathorn. For our projects under development, the Residences 38 an upscale residential project located in Bangkok Thonglor district, Soi Sukhumvit 38. This building consists of 36 floors with 92% progress of construction, which is a combination of service apartment and residential condominium F&B retail store in 30,000 square meter gross floor area. Presently, this project has partially operated and recognized revenue of THB 62 million from initial transfer of residential condominium to customers. The project highlights Ananda Development has been appointed as developer to oversee the construction, development and sales planning of residential condominium. The total project cost is THB 5 billion, accumulation of bank loan, shareholder loan and cash cycle. This project consists of 36 floors, Lower [indiscernible] facility amenities, including a gym and swimming pool, elevator from Level 11, Food and Beverage, which will be operated and managed by BTS Group. Starting from Level 2 to Level 23 will be the service apartments, which will be operated and managed by Ascott under the name La Clef Bangkok by The Crest Collection, marking a debut of The Crest Collection in Thailand. And from Level 24 to Level 36 will be the residential condominium under the name The Residences 38. Therefore, there is a total of 171 units, 115 units among them being service apartments and 56 units being residential condominium. Another project under development is the Langham, Customs House, Bangkok, luxurious 5-star hotel project with 78 keys in a rare, historic, colonial-era heritage building along the Chao Praya Riverside. This project consists of 8,200 square meters with 54% progress of construction. The project officially revealed in September last year, highlights are luxury amenities such as the Michelin-starred T'ang Court and the Chuan Spa, supporting the company mission to elevate Bangkok’s tourism, expected commission date around next year. So these are our update of Rabbit Holding for analyst meeting in second quarter 2025. [Portions of this transcript that are marked [Foreign Language] were spoken in a language other than English.]