Minor International Public Company Limited (MINT) Earnings Call Transcript

Good afternoon, everyone, and thank you for joining us today for the update for quarter 3. We, at Minor, of course, very much appreciate your interest and taking the time to join us here today, whether you're joining us here in person or whether you're dialing in today overseas. So a very warm welcome. Before I actually dive into the details, let me start -- let me also start by just giving some overview about the global markets and what's happening today. I'm sure most of you -- yes. I'm sure most of you are very familiar as to what's happening in the markets today. But just to give you an idea, of course, being here in the home market in Thailand, in spite of a lot of the challenges we faced in Q1, in Q2 and continue to face in Q3, like in Q1, we had the China -- the problems with the abduction and the kidnappings and then we had the earthquake. We had the political instability and then recently, the Thailand-Cambodia war hasn't really helped us here in the Thai economy, as everyone knows. Globally, we've seen the crisis in the Middle East with the escalation of the war and some of the airports being shut down, which has also affected tourism to a great extent. We've also seen the global markets actually taking a bit of a stumble in terms of some of the -- what's happening in Europe, in the U.S. with the trade war, the taxes and some of the other challenges they are facing. And also, of course, the Russian-Ukraine conflict, which has also increased some of our cost prices within the hotels and the food industry as well. But the -- on the upside, the tailwind for us has been Minor has continuously shown growth in Q1, in Q2, and we've just released our numbers for Q3. And we've delivered a strong performance compared to some of our other peers. And I'm glad to say that the performance, the trend continues. Q4 is also looking quite strong for us because as we go into our peak season and in spite of Europe going into a low season for Q4, their performance is quite strong and much stronger than last year, actually. I just saw the numbers for October for the group, and it's looking -- and it's come out really -- it's come out stronger than last year. So that's the silver lining for us, and we see the trend actually improving. We are still quite bullish about our growth where we say we will achieve anything from a double-digit growth, 15% to 20% CAGR. This year, we will get to about 13% or 14% on a CAGR basis as well for the full year. So I think we are on track for the full year. You will also see some of the actions we have taken over the past few years, shaping what we have done from a brand structure, what we are doing in terms of accelerating our asset-light expansion, so putting less pressure on capital for us. So in order to preserve capital and reduce our debt next year. So there are quite a few steps we have taken, which we will -- which also I will elaborate on. And also, that's actually translating into a good tangible moment, reducing our risk on asset heavy -- on the asset-heavy structure as well. So today, I will walk through some of the progresses we have made and also how we are expanding our footprint. But before that, I would like to share a short video for the audience here and -- we will share a short video. [Presentation]

So these are all the deals we have signed on an asset-light basis. So they're all management contracts, which we signed from Japan to India to the Middle East, to Australia. And you've seen when they will open as well. So as we are now accelerating our asset-light strategy, it reduces our risk quite a bit on the asset heavy as well. So as I said before, our focus is more on driving asset-light. And also for next year, our focus is laser focused on really trying to reduce our debt, the leverage to reduce our debt as well. And we do have some of the initiatives on that. So when I look at some of the recent developments, so here, you will see that some of the things we have done. So here, when you look at -- we continue to build our strength on the brand portfolio, and we've been focusing on the global presence. We're doing this through an asset-light model with some strategic partners. As you can see, we signed a joint venture with a group called the Sunrise Hotels and Resorts in Egypt, Egypt being one of the big key markets for Europe. So again, this is a joint venture on an asset-light basis to manage about -- to get up to about 50 hotels over the next decade. So this is something which we have signed. We're also looking at -- we've expanded the Tivoli brand, which we are showing here. We've done in Peru, in South America, we've opened our first nhow property because nhow has been predominantly based in Europe. So we've made an entry way into South America as well. Also, the first Anantara safari camp will open next year in Zambia. So this will open in quarter 2 of 2026, again, on an asset-light basis. So there is no investment from our side. And the last one is we continue to strengthen our footprint in Australia. So again, this iconic hotel, which will be the AVANI Hotel, which is the first fully service AVANI Hotel, which will also open in Australia next year. And also like we have plans to open in Auckland as well. Again, these are management contracts. We will also open the first 2 NH Hotels in Australia early next year under a management contract under lease, which will also open in Q1 next year. So let's expand our expertise also on the cruising. So what we've built on Luang Prabang with Mekong Kingdoms and also Loy Pela here in Asia. We're also looking at extending that partnership outside Thailand and outside Asia to manage more of those. So here, these are some of the highlights which we would like to share with the audience in terms of driving growth for the future. Turning on to Food. So that was on the hotel side. And turning on to the food. This quarter, we've also built up the momentum in terms of our global franchising business. So building up a platform to take the Food Group to become a much more of a global platform as well. So as I shared during the last analyst meeting, we opened the first Coffee Club in Nairobi in Africa. Again, it's a franchise. The sales performance has exceeded the expectation. And the plan is for them to open more of the coffee clubs now and start rolling on to more Coffee Clubs in Kenya. Sizzler in Japan has also -- is also expanding, adding new outlets, adding another outlet in Tokyo. I just came from Tokyo, and the Sizzler brand is expanding quite well. So they go from 10 to 11, but their plan is to now start rolling out the Sizzler brand across Japan as well. In Thailand, our brands such as Bonchon, Dairy Queen, GAGA, Swensen's, they continue their expansion, bringing our total outlets now from 1,804 stores to -- in 2024 to now 1,870 stores by year-end. In Indonesia, we expect to reach about 71 stores by the end of this year. And that was just from starting with 33 stores last year and most of them being GAGA and Dairy Queen. Our performance in Indonesia actually has given us confidence to introduce more brands into the country. So we are also looking at launching Poulet, which is a French casual dining brand from Singapore into Indonesia as well because Indonesia is a fairly sophisticated market, and it's a strong growth market as well. So we would capitalize on that as well. The next one is to talk a little bit more about achieving growth through brand extension and also new brands. So beyond brand expansion, beyond expansion, we've also created new brands to capture more opportunities as well. So on the Hotel side, following the launch of our 4 new brands, which we launched in the second quarter, we are now preparing to open our first managed hotel under the Colbert Collection in Dubai, which you just saw in the video. So this hotel will be our 26th hotel in the Middle East. So Middle East is becoming a very strong market for us with over 26 hotels and the pipeline looking very strong as well. And it will be a full conversion of the Dukes the Palm, which has been under managed, and we are taking over the management as well. And that will be rebranded as the Colbert Collection. It will be called the Dukes. The concept is pretty much inspired. The Colbert Collection, as you know, was inspired by the restaurant in London, which we acquired in 2018 under the Wolseley Hospitality Group. So we had 9 restaurants and one of the restaurants is called the Colbert Collection, which is quite -- which resonates really well with international travelers and the restaurant does really well with international travelers as well. So we've now taken that brand as a hotel brand, as a collection and launched it in the Middle East. Sizzler has also launched the Sandwich Society, which is extending the offering with premium grab-and-go sandwich concept. So I'm sure if any of you visit the Sizzler, you can also now have a grab-and-go in Sizzler, which is a sandwich as well to take out. So this actually leverages the Sizzler, the brand equity. It brings additional increase in sales, whilst the CapEx is very, very small because we are utilizing the existing Sizzler store, adding this new concept. We've also introduced another one called Hey Gusto. Hey Gusto is our Italian homemade dining concept, which allows us to reach customer segments that The Pizza Company doesn't really capture. So, Hey Gusto is another Italian concept, but not -- specializing a little bit more than the pizza concept, which is The Pizza Company has. In China, we have another brand, Lao Wang Zhu Gua, a brand which is based on meat-over-rice concept. And this was launched to again expand our rapid growth on the asset-light concept in China as well. So lastly, the Lifestyle brand is also expanding. So after the successful launch of our 2 POP MART flagship stores in Thailand, in Bangkok, we've also opened a POP LAND, a mini theme park running for 2 months from the 11th of November. I'm sure all of you know about the POP MART, the incredible demand and how it resonates with every age group across the world. And that has been a big success for us on the Lifestyle side. It also brings together with the POP MART, the retail as well, which is the -- under the POP LAND landscape. We're also bringing new brands into Thailand. So the first one under the lifestyle is called Sunnies which is from the Philippines, again, offering what we call trendy eyewear, so eyewear and cosmetics, flask and targeting more on the young gen. So again, we've opened our first store, which is doing above -- which has exceeded like what we actually targeted, so which is a good sign. And it's at the Dusit, the mall, which has been a success as well. We've also welcomed Villeroy & Boch, which, as you know, it's a 277-year-old German luxury tableware and home decor brand with new stores to open in Bangkok and Phuket. So moving on to enhancing shareholder value through what we call being agile and also driving shareholder returns. On the shareholder value, we remain fully focused on long-term creation of shareholder wealth through being agile and also being disciplined on capital allocation. So as I said before, the capital allocation has -- will reduce quite significantly as we move into asset-light. So this quarter, as you know, we've also completed the official delisting of Minor Hotels, Europe and Americas. So now this allows us greater flexibility for future asset allocation. And also, it will help us a lot in terms of including the formation of the REIT, which we are planning to launch next year. So this again gives Minor a full flexibility to manage this portfolio and also crystallize some of the synergies, which we've always promised our shareholders as well. So these initiatives will balance and reinforce our commitment on growth and also increasing our returns to the shareholders as well. So moving on to the -- some of the strategic highlights. Looking ahead for our 3- to 5-year, the growth outlook, 2018 -- 2028, we are still on track in terms of targeting a global portfolio of about 850 hotels signed and opened and about 4,000 restaurants. So that's our target, which we are on track. And by 2030 to get to about another -- to get to about 1,000 hotels and 4,500 restaurants. So that's always -- so we are on track, and we will explain to you as to how this is happening as well. So the expansion, this expansion will be driven by asset-light into new markets, and deeper penetration across high-growth regions as well. So as we explained before, we're looking at India, new market. We're looking at Japan. It's a new market, which is also we've signed. We're looking at Egypt as a new market. We're looking at U.S. as a new market where we will have 2 hotels coming up under management as well. And then on the Food side, we're looking at the new market, which is Philippines, further expansion in China and other expansion, taking our local -- our Thai brands outside -- from Thailand to outside Thailand as well. The next one is on the financial focus. So in terms of targets, so our 3-year CAGR, we are looking at the revenue growth of high single digit per annum. The profit growth, we're still on target to maintain the 15% to 20% CAGR growth on an annual basis. And this will be achieved also with the reduction of debt and interest costs as well because our interest costs will come down in the coming years with the launch of our REIT, as we mentioned before and also like looking at a possible spin-off of the Minor Food Group as well for next year. And that will help us to reduce our debt in Minor. And therefore, it will also help us to achieve our 15% to 20% annual compounded CAGR growth on the profits as well. Our ROIC is still target at 12%. This year, we will also meet our target, which is about -- we are close to about 11%. Our net debt to equity on the balance sheet side, in quarter 3 2025, as we just released our numbers, it was 0.9. For the full year, we are looking at 0.8 to 0.9. But the biggest movement will come next year when we will start to reduce debt. The net debt to EBITDA this year -- year-to-date, we were at 4.7%. For the full year, we are targeting about 4.5 to 4.6. So it's slowly coming down. Expanding our hotel portfolio. So this is pretty much -- you can see the concentration between asset-light and asset heavy. So in 2025, we have 66% of our portfolio, which is on owned assets. So this includes assets which we own assets under joint venture. And we only have 34% under asset-light. But 2028, in the next 3 years, our asset-heavy portion will squeeze down to 49%, but the asset-light portion balloons to 51%. So it's going more asset-light, as you can see. So this takes us today, as I mentioned before, about 630 hotels, which we have opened and signed to 850 hotels, which will be opened and signed by 2028. And you can see where the geographical spread of these assets as well. So of course, Asia, Middle East, the Americas, Spain, Italy, Oceania, Benelux and Central Europe will be quite heavy in terms of on the asset -- on the hotels, which we own and manage because of the acquisition of NH Hotels as well. And on the segment, you can see we are in 2028, we will have 21% of our hotels under the Luxury segments. 33% under the Premium and Select will be 46%. So as we see the mid-segment is starting to balloon, and that's where the value addition will be. So we will be more focused on the Premium segment also. So on the next few years, as we -- as you can see, we are rebalancing our hotel portfolio, both on the business model, which is asset-heavy to asset-light and also geographies by diversifying some of the geographies as well. So from a brand standpoint, our Luxury and Premium brands, which are Anantara, Tivoli and AVANI will grow faster given the rising brand recognition in multiple -- in the multiple regions. The next slide actually talks a little bit about the Minor expansion, the pipeline. So how are we going to get to the 850 hotels by 2028. So today, we have 630 hotels, which are opened and signed, as I said. We have -- under the asset pipeline today, we have about 230 hotels, which are under negotiation and HMAs or LOIs signed. The key regions we are focusing based on what we have today is the U.S., is the Americas, North Africa, the Caribbean, Europe, Middle East and Asia. Then we have a JV and -- sorry, equity and JV, again, which are in selected countries like Singapore, we signed AVANI last year with Kajima as a JV with Minor taking 25% of the equity. Japan, as you know, we've signed a partnership agreement with the Royal Holdings to get to about 50 hotels in the next 10 years in Japan, Spain, Italy, Portugal, Australia and Africa, where we will continue to grow as well. So this will take us to the 850 hotels under open and signed by 2028, together with the -- on the asset-light side. So our -- as you can see, our pipeline remains predominantly heavy on asset-light with more than 230 hotels under negotiation, including both signed and LOIs we have signed as well. So our focus is to drive both fee income and also brand equity as well. And in the U.S., we have signed our first Anantara with branded residences under the management in Miami, which we -- it will open in 2030, the first hotel with residences. And we will also launch our first Wolseley Hotel in New York next year, and that's a rebrand. So we don't have to wait for a greenfield development. This is a rebrand where the owners will renovate the hotel early next year, and we will launch our first Wolseley Hotel in New York. The first NH Collection is also being launched into Malta, which again is another European city as a management contract. And also in India and in India, we've expanded with -- we are expanding with Anantara and AVANI properties, where we have signed hotels in Kur. In this year, we will open 2 AVANI hotels in Lonavala. So we already have 1 hotel in Jaipur, which is the Anantara. We'll open 2 more AVANIs in India and also AVANI, the Sunray Beach Hotel in Vizag. And we are getting a very strong following in the Indian market for our brands. So hopefully, in the next -- in the coming years, we will be able to accelerate the growth on the -- on our brands as well. The next one is to show the year-on-year, the ADR uplift through some of the renovations we are doing in Thailand. And I'm really -- I'm sorry about the noise factor here today. It's not to show you that we are renovating, but we are renovating this hotel. And this will be -- we have a big buyout from the 1st of December. So we are speeding up the renovation of this hotel. This room has been done. We're doing half the hotel this year. We're relaunching the hotel to a very high standard as an Anantara. We are doing some of the public spaces. And once the festive finishes in December, we will start to renovate the other half. And then by June next year, we will have a brand-new fully renovated hotel as a flagship brand here in Bangkok, where we can compete and we will compete with some of the other luxury brands, including our neighbors, where we own the St Regis and also the Ritz-Carlton also, which opens here in Thailand. So we will be able to elevate our standard and compete with the other brands as well. And also in Thailand, we -- so this is Anantara Siam. Anantara Golden Triangle, we completed the renovations there. So here, we always look at the ROIC and also the payback, we've significantly improved our rates. So our rates in Golden Triangle have gone up by more than 20%. This is coming from a high base. Of course, Anantara Siam, we are hoping to get a rate increase of over 40% once the renovation is done. Then we have the Anantara in Hua Hin which is one of our oldest hotels, which has also gone through a full refurb, including pools, restaurants, rooms, everything. And there, we are looking at a rate increase of anything from 20% to 50% as Anantara as well. So this will elevate our brand. It will elevate our top line and also our income streams as well. And then we have Anantara Layan, where we continue to expand and invest in residential, which has been highly successful, as you know, Phase 1 and Phase 2, we sold it at a high -- at a 20% to 30% premium to the market. So there, we're also completing our renovation as well for the hotel side. But on the residential side, we continue now with Phase 3 and Phase 4 of the residential business there. So we see a strong sales momentum on the asset value on the real estate business as well. So here, like as I said before, for Phuket, at Layan, the Kiara Reserve is what we call it, 19 out of the 46 units have already been sold. And the revenue recognition of this will take place in 2026 once we transfer the titles. We also -- there's a new super luxury project in Phuket, which is an investment where in Layan in Phuket, we have more than 500 rai of land with our JV partners in Kajima. So we will start to sweat or crystallize the value of that land through doing super luxury villas and condominiums and also retail in the future. So this is a long project, a long-term project where we acquire the land on a phased basis. We convert them to luxury villas and condominiums. We sell them and then we go to the next phase, and we do the next phase. We're also building the first Marina as well in Layan in Phuket as well. So that's where our investments will go in, which will have a very strong payback, but also really elevate the brand as well. So here -- so the projects will follow more of a capital efficient doing it phase by phase. so that we don't take the risk of doing everything at the same time. So we're doing it on a phase-by-phase basis. We did Phase 1, we sold. We did Phase 2, we have sold. Now we're doing Phase 3. And once the sales complete, we will do Phase 4 and Phase 5. The next one is about on the Food side. So we continue to expand our Food with asset-light growth because the food -- our Food business has been a lot on the asset-light basis anyway with strong cash flows. So here, like if you look at 2025, we have 50% we own and 50% we franchise. By 2028, we will move to 56% franchise and 44% owned. So again, on the food side as well, the brands are getting a lot of traction. So we will start to franchise our food brands more. By 2025, we have 2,836 outlets, as you see, predominantly in Thailand, China, Australia, Singapore and now gone into Indonesia and other countries. By 2028 is to get to more than 4,000 restaurants or 4,114 outlets. Again, diversifying much more into other countries as well. As you see, Indonesia is becoming a strategic focus as well on the food side for us and other countries as well, including Africa, as I said before. So Thailand will go from 76% of our outlets in Thailand to 69% in Thailand. It doesn't mean we're going to reduce Thailand. Thailand will continue to expand, but we will expand much faster outside Thailand on an asset-light basis or franchising our brands. So that is the shift on the Food side, where we can scale much faster because food -- on the restaurant side, we can scale much faster and open much faster because it's restaurants and it's very low capital intensity because we keep reducing our CapEx on the food side in terms of creating these new brands. This year, we've created quite a few brands, like I explained before, including Steak & More, which is a brand which is doing really well for us in Thailand. The next one on the Minor Food is to strengthening our existing brands. So we talk about menu innovation. So we have innovated our products and also our value offerings as well. And we're doing it with a combination of entering into new markets or penetrating some of the new markets as well. So the innovation is a major drive for us where we have seen that the brands are becoming much more creative, much more relevant today. If you look at The Pizza Company today and The Pizza Company 5 years ago, it's very different. If you look at Steak & More as a new brand, it's doing very -- the performance is very strong on a same-store sales basis as well. And the MPSA is sometimes higher than some of our other brands on the Steak & More because it's much more volume driven, and it really works for us here in Thailand. And it's a great concept as well. So the GAGA is expanded into what we call the new nondairy range. So GAGA has added a nondairy range as well. So therefore, it helps for us to expand our customer focus with people who are dairy -- have allergy to dairy as well. Bonchon has also broadened its menu by going beyond fried chicken. As you know, Bonchon started as a fried chicken brand. But today, it's becoming much more family-friendly as a casual Korean dining brand, which is again helping us to drive dine-in sales into Bonchon as well. Swensen's has successfully lifted the foot traffic through value campaigns, as you -- I'm sure you've been through Swensen's, including some of the new items, which are like the THB 69 the Magical Bingsu and also the Waffle Wonderland, which has resonated really well with the consumers in a soft spending environment today because whether we like it or not, we know in Thailand, the spending has come down. So therefore, we're now trying to see how we can maximize the sales through lower spending, which is happening at the moment, but with lower pricing, offering new products. Burger King, again, has benefited from a lifestyle-driven marketing like we have a major collaboration with a global anime franchise, the Naruto, which has actually boosted the average ticket sales and the overall sales as well. So we are also scaling market penetration in Thailand, Indonesia as part of our core brand strengthening as well. In Thailand, today, we operate in 77 provinces, giving us quite a nice nationwide reach on our core brands. We continue to expand into our secondary provinces as well with opening Dairy Queen as a stand-alone brand as well. So we've opened quite a few Dairy Queens and also GAGA entering into markets even up to the south, like Hat Yai, Saraburi as well. Steak & More is also extending the key cities such as Chonburi, Chiang Mai and also Khon Kaen. Indonesia remains important with the new -- the growth engine. Our presence has been led by GAGA and also Dairy Queen, and it has now reached 57 stores, and we are on track to exceed 70 stores by this end of this year -- by year-end. So we are also actively promoting opportunities to introduce additional brands, including Sanook kitchen. It's a Singapore brand, Steak & Mall and also Pizza Company as well. This one is to show the value creation under study. So as I mentioned before, we are exploring, number one is the hospitality REIT to launch IPO. Number two is to look at exploring Minor Food IPO. So these are two of the major big initiatives which we are exploring and will be launched next year. In order to reduce our debt, in order to create much more growth opportunities through asset-light as well and put less pressure on our balance sheet and also driving much more in terms of net income as well, which will also help us to drive our EPS because our focus is to drive earnings per share over the coming years for our shareholders as well. So the potential of the Hospitality REIT IPO and the consideration of Minor Food is to unlock the value of the two businesses. So as you know, today, Minor Food is part of Minor International, which is not getting its true intrinsic value. By doing the IPO, we strongly believe that Minor Food will be able to command a much higher multiple and a value as well. So unlocking the value, which will help us to strengthen our balance sheet in the coming years. So these two initiatives will provide the market with clear visibility into the value of our underlying business, which should be supported by improving our trading multiple for Minor as well. So the cash proceeds generated will be used to reduce debt, so the waterfall is to reduce debt, which will enhance liquidity, financial flexibility and also the overall capital efficiency as well. So we're looking at reducing debt. We're looking at maybe deploying some of the monies into expansion like some of the real estate developments we are doing here in Thailand, which has a larger return on capital as well. And then helping us to shape our balance sheet much stronger than what it is now for the next year and the years to come. So we could -- so the other option is like so reducing debt, increasing our growth and also the possibility of maybe a share buyback. So the share buyback, as you know, like today, our share price is way undervalued. And I think we believe that our share price where it should be and where it is today, the valuation is quite low. So again, we are looking at -- we are exploring options in these 3 to see how best we can manage our capital structure as well. So moving on to the numbers now. So I'm sure like you've seen our 9-month year-on-year performance, the recap. On the revenue side, our reported revenues have gone up by 3% on a constant ForEx basis because we've had some ForEx headwinds. But on a normal basis, it's about negative 1%. The 9 month on the core business, on core revenues, our -- the revenues have gone up by 2% on a constant ForEx and a negative 2% on an actual basis. Minor Hotels contributed 80% of the revenues, total revenues and Minor Food contributed 20% of the total revenues. This translating into profit. So our profit -- our reported profit on a constant ForEx has grown by 49% and 47% on a year-on-year basis because last year, as you know, we had some headwinds on the ForEx. So this year, our ForEx, the growth -- it's been very strong. But excluding that, on a core basis, if I look at core on net profit, we've grown 14% and 13%. So as I said, our target is 15% to 20%. We are at the moment, we're a little bit short. We are about 13%. And hopefully, we will catch up by year-end to moving into about 14% or maybe close to 15%. So that's where we are for the 9 months of the year. This is in spite of all the headwinds we've had globally and also in Thailand, which also affects the Food Group. And the Food Group in China has also been affected as well because of what's happening in China. So we have been -- the Food Group has been quite soft, as you know, in China, which has actually impacted us and the hotels and a little bit on the food like here in Thailand and also on the globally like with the headwinds we've had. But in spite of that, MINT has been able to produce a 13% CAGR on a year-on-year basis. And the numbers are getting quite large now. So by year-end, we're quite confident that we will target to about a 14% to 15% annual CAGR growth. Next year, it should be better once we realign our capital structure through the 2 big initiatives, which I explained to you before about the food IPO and also the hotel REIT as well. So again, the revenue -- the core revenue is THB 121.7 billion. And looking at core net profit, we achieved THB 6.2 billion, which is a 14% on a constant ForEx basis and 13% on a like-for-like basis. Moving on to the 9-month performance. Here, you can see how we've achieved it. So I know people are quite concerned about the global economy and also what's going to happen next year. So far, yes, we have had those headwinds. I think there are challenging times, but we have taken a lot of steps. Like for example, if you look at Thailand, the Chinese arrivals dropped by far. We hope it will improve now, especially now there is some pressures between Japan and China. And I hope we will see more Chinese coming in, at least for the Chinese New Year next year because now we're going into the high season with the European season, which is the festive. And then the Chinese New Year will pick up in Jan and Feb. So I hope that our revenues will go up at that time for sure. So in Europe and LatAm, our RevPAR has grown by 4% in spite of the headwinds we've had. In Thailand, our RevPAR has been almost flat or 1% growth. In the Maldives, it's a 21% growth year-on-year. So Maldives is continuing to be quite strong. And the management letting rights in Australia is flat, our RevPAR. And our managed hotels has dropped a little bit on the Thai baht on the RevPAR side as well. So that's on the RevPAR side. And when you look at the net profit for the 9 months on the hotel performance. But what I would like to point out is that we benchmark our performance with our concept. So our Thailand hotels performed on RevPAR growth, reflecting a stronger pricing power and the high-spending travelers and our effective dynamic rate management system. So in Thailand, we are still much stronger than the other hospitality players. In the Maldives, our portfolio maintained, as I said, an exceptionally high growth, strong growth with the RevPAR surging on a U.S. dollar basis by 21%. We also have by a higher occupancy and rates demand, which is coming from -- mainly from Russia, from Europe, China, UAE, Australia and Brazil. So that's -- those are the markets which have driven the Maldives performance. Our performance in Australia has been stable, as I said before, which has been in the second quarter, the corporate demand is now starting to pick up. And we see that the new events which are being introduced in Australia like the musical events and also the sporting events will start to boost the leisure performance next year. The managed hotels, the main reason it dropped 4% is mainly because of the ForEx translation. So despite that, our core profit rose by 18% year-on-year on a constant ForEx with the net margin expanding from -- expanding to 4.4% from 3.8%. So on the hotel side, we've seen the core profit has been expanding by 18% on a constant ForEx basis. So on the hotel side, we managed to keep the ForEx -- we managed to keep the growth above the 15% to 20% target. Moving on to the food side. we see that Minor Food achieved a 9-month growth revenue increasing by 4% on a constant ForEx basis. The growth was mainly driven by store expansion in Singapore and a higher coffee roasting revenues in Australia. In Thailand, our total system sales for the 9 months grew modestly through same-store sales, which were actually impacted by weaker mall traffic, especially early this year after the earthquake and also the softer consumer sentiment as well. On a positive note, Thailand same-store sales grew in the third quarter, turning into a positive territory as a result of some of the new menu innovations and strong value offerings. Meanwhile, we also maintained our competitiveness, outperforming other key competitors in Thailand on a comparable same-store basis as well. So in spite of some of the headwinds we face, we're facing -- we're performing much better than our comp set, both on the Hotel side and the Food side, both in Thailand and also outside Thailand as well, right? When I look at our European portfolio, European portfolio has been very strong compared to its comp set as well. The next page is talking about our balanced CapEx growth for -- how do we balance our CapEx growth. So in 2025, our CapEx on the Hotel side is about THB 6 billion spend, but these are regenerative CapEx or CapEx where the money goes into real estate, where it will then be crystallized by selling the real estate or the residences. On the Food side, we are hoping our budget is about THB 1 billion. On the Hotel side, it's about THB 6 billion and others is about THB 1 billion, which is Lifestyle and others as well. So this is our latest CapEx update, where we have actually pressured down the CapEx because as to what's happening, like trying to preserve cash. So in addition to this THB 8 billion, as we all know, the tender offer, the listing of MHEA, we also allocated cash for that as well, which is another THB 4 billion. So the priorities on CapEx, which remains on projects driving high return, as I explained. On the Hotel side, with renovations, rebranding, which is uplifting our ADR, as we have seen and also doing residential, converting the land into residences and selling those residences, which is where we have had a proven track record over the last few years, where we still have a strong demand for Thailand as well. And then we have a selective restaurant expansion where we usually see a payback on the restaurant side of about 1 to 2 years or 1 to 3 years, the maximum. On the capital structure, management for financial resilience. Here, you can see our interest expenses for the first 9 months has decreased by 19% year-on-year, arising from debt reduction and also lowering funding costs as well. So we managed to lower our funding costs as well. So the latter, the lowering of the funding costs because of the active capital management and the company's improved credit profile. Interest-bearing debt increased to THB 95.5 billion from -- sorry, decreased to THB 95.5 billion from THB 99.1 billion in the last quarter. And this was mainly from the early redemption of the THB 400 million senior secured note and the prepayment of the bank loans, which we settled, so reducing our debt there in Europe. But our net interest-bearing debt to equity and net interest-bearing debt to EBITDA increased slightly in the third quarter to 0.9 and 4.66. This was mainly triggered by the cash, which we used to delist Minor Hotels Europe and Americas and also the interim dividend, which we paid to our shareholders. By the year-end, we are looking to get our net interest-bearing debt to equity to come down to the range of about 0.8 to -- 0.8 to 0.9 and the net EBITDA down to about 4.5 to about 4.6. And this is mainly supported by the high season coming in quarter 4. So we will see an improvement in some of our financial ratios going down and also the earnings in the next -- the high season or the fourth quarter going up where we will get to about a 14% to 15% CAGR on our net earnings as well. So that brings me to the end of the presentation. And I'm happy to take any questions if our audience have -- Sorry, keep going. The second one is what?

The second question is what methodology do you want to use in REIT initiation? Like do you want to sell assets from minor into REIT or sale leaseback or sales of revenue recognition, right? So that's my second question.

Okay. Great. So the first question was on the REIT, whether we consolidate or not consolidate. So I think we are looking at options. So this REIT, as you know, Minor has been looking at this asset recycle since 2018. And we've done some asset recycling since 2018. But what we are doing is we're setting up, but we are now boosting it by creating a hospitality REIT. And on the hospitality REIT, the plan is that we will contribute assets into the hospitality REIT, and then we will IPO it. We haven't decided yet whether we consolidate or nonconsolidate. So again, that's something we are looking at. But at the end of the day, the REIT will benefit by releasing cash into Minor and using those proceeds to reduce our debt within Minor as well. So again, we have to think -- we have to review whether we consolidate or not consolidate because there are some pros and cons in terms of consolidation and nonconsolidation. The second one is selling assets into REIT, right, whether it's a sale and leaseback. No. So it's a pure -- it's a true sale into the REIT, and there is no sale and leaseback. So it's a true sale into the REIT, which Minor will continue to manage these hotels for the foreseeable future. What we are doing is we are releasing cash. I think the attractiveness of the REIT is that in the future, when we find expansion assets, we can easily contribute those assets into the REIT. So not putting pressure on the Minor balance sheet, but actually contributing those assets into the REIT. And Minor will continue to manage those assets as part of our growth model. Does that answer your question?

Like you said through sale of assets or the sales of -- sale right of revenue recognition of the hotel.

Yes. So say, for example, if we decide to consolidate, if Minor owns control of the REIT, then we will consolidate that as part of our earnings and also the profits as well. But if we decide not to consolidate, then it will be a different accounting treatment as well.

Let me ask you another question. Could you give me a summary of the company's land profile, like how many of the land plots that company owned and how many are leased? I mean, in operating hotels in Europe, especially?

So in Europe, we have about -- when we acquired NH, we had about 385 hotels, out of which about 100 hotels are owned under freehold. And the balance, 230 are leased and the balance is managed. So when we look at the REIT, we will contribute some of the European assets into the REIT, which would be quite attractive from a REIT perspective as well.

I have -- yes, actually quite a couple of questions. So if I may continue with the REIT first. We are -- is Minor still planning for middle of this year since we still don't know the holding portion or the type of assets that we are looking to put in and even the size, right? Is it still USD 1.5 billion that we talked about in the past? Could we just get more detail on what we know about the REIT or the decision we've made so far? That's the first question.

Okay. So let me answer your first question. So in terms of the REIT size, we do have a plan because we've been working on this REIT for about 2 years in terms of structuring the best way for the REIT. And we looked at 3 modules for the REIT, right? And before we did the REIT. So we looked at sale and leaseback, what would be the best return for our shareholders. We also looked at selling a stake in -- whether it's NHO shares or selling a stake. And the third one was we looked at the REIT. And when we did the exercise in detail, we found that the REIT was the most attractive source of funds. Coming back to the size, we still -- we know how many assets we are going to put because we've done that planning process, and we are beyond that. We are now into structuring of the REIT. We looked at whether we structure the REIT here in Thailand or whether we do it in Singapore. And we found that to do the REIT in Singapore was much more attractive because it has a higher liquidity flow and also it will attract a much wider investor pool as well. So that's done. In terms of the size of the REIT, so size of the assets have been decided, size of the REIT has been decided. So it would be anything from THB 1 billion to THB 1.2 billion, THB 1.5 billion, right? So that's the size of the REIT. And the last one is we're looking at whether -- how much we sell out, whether we sell out 50%, 40%, 60%, and that's something, again, once we have more clarity in terms of the yield we will get, then we will decide what portion we will sell. That will then trigger whether we consolidate or not consolidate. So that's where we are. So it's fairly advanced. And the launch is not this year. The launch is next year of the REIT. And it will be -- I think we're looking at Q2 or Q3.

Understood. Then we're on the point of leverage, right? Can we talk about the target or the new target that you've highlighted now? It shows that leverage pretty much remains stable from before. I understand that you did the NH delisting, they needed cash and cash for the interim dividend. But what is the optimal level that we are thinking of? And when is Minor going to reach that level? And yes, just along that line, what needs to be sacrificed or what needs to happen before we reach that level?

Okay, Great. So to do that, there are 3 drivers we have, right? So the first driver is to ensure that we continue to maintain our earnings so that when we do the REIT or the IPO, the earnings don't drop. So that will -- so we just need to maintain that the earnings growth is there. That's number one. Number two is to look at when we do the REIT or the IPO in terms of the capital allocation, what's the most attractive, how does it work? Now do we reduce debt? Do we do a share buyback? Or do we pass it as dividends? So those are the 3 outcomes, right? So again, there, we're looking at -- because today, we look at -- when I look at the earnings per share or the growth, we want to make sure that the EPS also continues to grow for our shareholders. So I think it's a balance between earnings per share, reducing our debt and also maintaining the net profit earnings for the coming years. So that's what we are trying to balance to make sure that we don't have a drop in one and the hike in the other one because if you have a drop in earnings next year, I think our shareholders -- we might have a drop next year, but we will reduce that. Yes, but then our growth will reduce. So it's a balance which we are trying to ensure that we strike the right balance in terms of the capital allocation from the IPO of the Food and IPO of the REIT as to how it will go.

And optimal level, there's no...

Optimal level of debt. Our debt -- the target including perks because I consider perks as debt. So including perks, our optimum level, we're looking at about 1.3, 1.4.

And yes, the last question for me for now. The management contract seems to be off the pace slightly. You seem to have pushed back the 2027 target to 2028 for the expansion. Just wanted to understand what was the pain point there? Is there any issue in terms of securing those? Or is there -- what is the reason? And yes, we can start there.

The main reason is the slowdown where sort of -- we've signed these contracts. We were -- this year, we've opened 19 hotels. We will target to open 30. So we have time. Next year, we are opening 50 hotels. We were targeting to open 75. The year after, our target is 100. But the pace has -- because of construction costs with some of our HMAs have gone up. Some -- in some countries, the permits have caused some delays. So these are affecting us being open, right? We just opened 1 hotel after 7 years of construction. So these are well beyond our control. So what we are doing is, now we are looking at our pipeline a little bit more carefully and a little bit more on a realistic basis to say, okay, if these delays continue, what will be the impact? And also now the new growth engine we are looking at on the hotel side, which will be -- which we haven't actually factored in fully is the franchising. So for the first time, we are also starting to go into the franchising business on the hotel side with all our brands, except Anantara. So on the franchising side, I believe that our expansion rate will be much faster because these are contracts we can sign, which are existing hotels, which we can sign as franchises and launch them pretty much straight away, which we haven't factored in because it's a new thing which we are looking at. We already have 6 franchises in Australia, which we manage. And we already signed one in Europe, but it will open in 2 years. But now we're looking at franchises where it will crystallize straight away. We have not factored that in fully in our numbers.

Okay. So can I conclude that it's reasonably outside of your control from the construction side from other things rather than there's an issue with either the brand or your sales team or stuff like that, right? So it's outside of the control. So you're still comfortable that your brand is strong enough to achieve those target in '28 and '29, that is the angle.

Yes.

Okay. Because one of the questions we tend to get is also you seem to have done a good track record with JV partners and expanding into new countries using JV, right? And you've shown there. So the question that investors tend to have is, would that be a better off model at this stage of the brand? Or is the brand -- yes, can you really compete with the likes of the Marriott, the Hilton of the world? And/or do you have to do a new strategy in terms of offering lower rates or anything like that to be able to compete? I understand that you've previously said that, that is not needed at this point, but because it being relatively slower than what you were expecting, that is the train of thought that a lot of investors have.

Yes. And it's a fair question. I think -- see, when Minor, on the Hotel side, when we started, we started as an asset manager, right? We own the Four Seasons, all the 4 Four Seasons. We own 4 Marriotts in Thailand, and then we had 3 Anantaras and then we had a hotel in Vietnam. We started to build the brand. Anantara brand was launched in 2000. The brand is only 25 years old. But today, Anantara brand is being listed as #8 as a luxury brand in the world, right? So this is a huge credibility for the brand. Number two is that -- so when we launched our brand, we had to invest money in our brand at that time, and we opened most of our hotels under asset-light. We owned all the hotels because we had to gain that scale. From that, we then moved to joint ventures because with the success there, we managed to get into joint ventures outside Thailand. We went into Maldives. We went into Africa and places like that. So we passed that stage. So today, we are at a stage where with 600 hotels with each of the brands, and we only have 12 brands. And out of the 12, only 8 are fully launched. We had the 4 new brands we have launched only last year. So out of the 8 brands, we have about close to about 600 hotels. And those brands are now gaining scale in terms of management contracts. So like the pipeline I showed here is all management contracts where we are not looking at joint ventures or we are not looking at putting -- investing anymore. So therefore, we've got into that stage where our brands have been -- have built a lot of equity with owners. Like when I explained to you about the Dukes in Dubai, it's a conversion from another brand to our brand under the new brand, which is the Colbert Collection. And this owner, this is his eighth hotel with us and all the 8 hotels are under management contracts. So therefore, it shows the confidence from the owners on the brand and also the performance as well because they see our performance. So I think we are at that stage where we've gained a lot of traction and really get to that last stage in terms of now launching franchise. If we try to launch 5 years ago, the franchise, I don't think we would have taken off. But I think today, we are in a place with the distribution and everything we have, the loyalty program, the distribution we have, we're able to really perform sometimes better than some of the bigger brands because I compare -- like, say, for example, I compare NH Hotels in Europe with all the other listed companies in Europe with Accor, with Marriott and all those things. On a per key basis, our profits are quite good, much stronger. So our earnings are good. What we don't want to do is to take a short-term view where we sign 3 years, 5 years management contract, no top line fees and only bottom line fees. That's a short-term view, which I don't think Minor will ever do. Like I think we're building a business which needs to be sustainable for the next 20, 30 years. So I think -- so there, yes, we do lose hotels to some of the big brands. But today, I think when you look at most owners, they are not -- they're moving from the big brands to the smaller brands because they want something different. And I don't think -- like because the larger brands are becoming cookie cutter and the new generation or the millennials are looking for experience, looking for new brands, looking for something different. They don't want to wake up in a country and look at the same room, which they've looked at. It's the same as Thailand or same as U.S. or whatever. So they want something different. So I think that's why I think the trend is moving. We've seen that. There's a new trend on wellness. There's a new trend on slow travel with the trains, the cruises, everything else, which was never there 3, 4, 5 years ago. So with that emerging, and we are in the forefront of that, we launched our biggest wellness facility in Layan, in Phuket last year in October, which is doing exceptionally well. So now we are able to roll that into other countries as well. And with the Thai hospitality, we can bring that expertise outside. So I truly believe that we are in a very strong position. And when I look at the 600-plus hotels with 80,000 rooms, we are -- if I look at global, global brands, we are #12, eliminating some of the brands which are, like, say, if you take Jin Jiang or if you take Huazhu, they are pretty much China focused. They are bigger than Marriott or almost the size of Marriott, but they're all China focused. But if I look at the true, true global brands, we are #12. So we are -- we've gained a lot of traction.

I would like to ask about the plan to IPO the food business. What would be the rationale and the strategy there? For example, would you really need capital to grow the unit? And aside from unlocking value for the parent company, Minor Corp, is there any other things that you look at for this strategy?

Okay. So the main focus, like the main intention on the Food Group IPO is to really unlock its intrinsic value because I think when I look at the Food Group and the Hotel Group, like Food Group is part of Minor, but it's getting dragged by the Hotel Group because Hotel Group is 80% of the revenues, Food Group is 20% of the revenues. So we believe that the Food Group will command a much higher multiple. And also, like most of the analysts, when they do the projections in terms of cash flow or discounted cash flow, it's very difficult. Not many people understand our business because it's quite complex. So number one is we are trying to make it easy or trying to make it simple. Number two is to unlock the true intrinsic value of the Food business where we could command up to 15, 20x multiple. I don't know. I'm sure we will. And therefore, then you have a totally separate focus on the Food Group where we can continue to expand the Food Group on an asset-light basis because our brands are quite strong now and use those proceeds at the parent company level to reduce debt and to use also the funds for expansion so that we can create the growth story in the coming years.

Just to follow up on that. Are you also looking at M&As for Food business? And in terms of IPO timing, what are you thinking of?

Again, IPO timing for the Food business, like I think it's under discussion. We're looking at next year because we need to go through quite a few regulations and stuff. We have to take it to our Board. We have to get the Board approved and then we have to inform our shareholders, then we will commence the process. So it will take time. And then SEC has to approve the time line as well. So I would say the time line may be next year.

The other question is on the hotel side. Your neighbor competitor are talking about perhaps cutting price for the 4-star, 5-star asset. Just would like to ask about your strategy in terms of pricing in Bangkok.

So I think for us, we've always said by reducing rate, we cannot -- occupancy is not going to go up because as you saw, like we showed how our rates are growing. And you can see we have to grow rates. And the reason we have to grow rates is today, the cost has gone up. Cost of labor has gone up. Like look at Thailand, we have minimum wage here. Look at Europe, we have the new wage increases in all the countries, including London, where we have restaurants. So the cost of wages is going up. The cost of living is going up. The cost of energy has gone up. And therefore, if we start to cut prices, you're racing to the bottom from a profitability perspective. But as long as we maintain our standards and the service and all those things, our guests, they see the value, and they are willing to pay that price. They are willing to pay the price. Like if you look at some of the luxury brands, they're not cutting costs to achieve their profits. They're making sure that they keep growing because once you cut the rates, it's very hard to increase the rates in the future. Like, for example, Anantara Siam, we're looking at a rate increase of 40% next year. But because if you don't increase the rate by 40%, I cannot renovate this hotel. So if I don't renovate the hotel, then the services will drop, our guests won't be happy and the guest will not pay the rate. So it's a downward spiraling, right? But if I spend the money, I really truly position this hotel as an Anantara, the guest will pay.

May I ask you about supply hotels, about the supply in hotel business in Europe, like are there any restrictions on building hotels in Europe like in the old district, in some city or some town in Europe or can they be built as long as they meet minimum requirements?

The good thing is there is restrictions. There's restrictions in all the countries, Spain, Portugal, most countries and especially today because of over-tourism, you see the problems over-tourism is causing. So therefore, the supply will be restricted. The good thing for us is that we are already in the key locations in these countries. So we have a great advantage where we have a presence in most of the key countries where there is a restriction for entry for new supply. So that's a benefit for us. So I think we benefit by far in Europe.

And that's the point why I asked you. Can I ask you another question about this? So like you said, your hotel in Europe is some -- is located in some strategic location that may be there is some restriction to the newcomers. But what about the land cost of your hotel, like do you -- does landlord raise the rent price a lot or it is in line with the inflation?

So the lease -- the cost of the leases is already agreed. We have structured -- post-COVID, we structured a fixed and a variable rate. So these are agreed. So in some of our hotels, we pay a low fixed rate and a variable rate based on top line. So we manage the cost based on that, especially after COVID. We took measures to move from fixed leases to variable -- fixed and variable leases. So that has helped a lot. So -- and these countries, there is also restrictions as to how much the landlords can increase the lease by as well. So there is a survey, there's a valuation which will be done. And then based on that, they can increase the rent. So again, this is another issue where -- another reason why we cannot reduce rates. We have to keep increasing rates so that we can cover these costs as well.

Dillip, asking about the Food business expansion in Indonesia. Do we need to like having a concern on the political over there, do you see any like can be a threat for the Food business expansion because the Indonesia will be one of the key strategic location that you go into?

So yes, I think we entered Indonesia last year. So we started small. We understand the country because we do have hotels in Indonesia. And now we are starting to expand the Food business there. We believe that the political landscape, I think all the countries have challenges. I think if we can manage the political landscape in Thailand, we can manage political landscape anywhere, so -- which is good. So we learned a lot from Thailand. So I think Indonesia, like it's -- yes, it's a new gateway, but it's not new for Minor because we already have hotels there. And we are looking at it not going in a really big way, we're taking steps in a small way. So this year, our expansion is to get up to about 100 something. And then next year, we will slowly start to increase. So it's always step by step, and that's what we're doing.

Yes. So your next 3 years' plan won't be changed from now. I mean, even we have seen some political situation right now.

Yes.

Okay. Yes. And then for the hotel renovation, we have seen the ADR increase like 20% to 50% that you show in the slide. What about the room revenue? After you have been like increased the rate, what about the occupancy and that could affect on the room revenue, how you experienced in the room revenue so far?

So I think we're looking at quality of our guests to make sure like -- so let's say, for example, Siam, we will increase anything from 20% to 40%, right, I showed. And in other hotels where we have completed renovation, we are getting those rates. In Samui, we -- the White Lotus effect, we saw a rate increase of 40%. And in Anantaras, we saw a rate increase of 20%. But again, if I look at Samui as an example today, like the high season today, you cannot get a room now, it's full. So I think in spite of some of the pressures we have today in Thailand, with Chinese not coming and some of the other markets, the seasonality business is still very strong. So what we do is during the high season, we make sure we maximize our rates. During the low season, we make sure we maximize the occupancy. So that has always been our strategy because in the low season, you cannot charge high rates because then your occupancy is going to drop a lot. So in the low season, we try to maximize the occupancy so that we don't lose money. But in the high season, we maximize our rates because the guests will pay, and that's what we do.

What could be the average room rate -- sorry, room revenue increase, I mean, on the average, can we expect like 40%, like the same lag that you have increase?