Rabbit Holdings Public Company Limited (RABBIT) Earnings Call Transcript

Good morning, and welcome to U City's Second Quarter 2022 Analyst Meeting. As usual, today, we have Khun-Soraya Satiangoset, Acting CEO and CFO of U City as a key speaker as well as me, [indiscernible], the IR of U City. [Foreign Language] The agenda for today will be divided to [ 5 parts ], the key highlights and the business update, then we will go to the financial update and operational update. Thus, we will open the floor for the Q&A. Let's begin with the key highlights in this quarter. The total revenue increased by 121% year-on-year to THB 2.4 billion. And EBITDA stood at THB 1 billion, an increase of 112% year-on-year. And this quarter, the company recognized an impressive net profit of THB 563 million, improving substantially from a net loss of THB 102 million in the previous year. The net interest-bearing debt to equity ratio in this quarter stood at 0.35x compared to the 0.37x in the end of last year. For the key development in this quarter, may I again reiterate U City's transformation from its real estate business, which came under the pressure of COVID-19, which had resulted in lower returns combined with the high-risk volatilities. Meanwhile, the financial services have the higher growth, the higher ROE and demonstrating the resiliency when compared to the hospitality and real estate business. The U City took its first step into the financial services business by acquiring a 75% in A LIFE, an insurance company, which in this quarter we successfully rebranded to the Rabbit Life Insurance or Rabbit Life with the new vision "Think differently to improve your life with a life insurance that hedges your best and provides the simplified solutions." Apart from the vision, Rabbit Life operates on 3 pillars: First, the new code of conduct, or practice guideline known as the Listen, Learn and Create operating model, emphasizing on the custom-centric principle. This will allow Rabbit Life to quickly adapt feedback from the customer and reduce the complexity to the tailored products and services based on customer preference. Next are the 5 core strategy, consisting of the wealth, health, protection, rewards and savings. Within the polar chart, customers are able to mix and match to customize certain products and services to base on their desired choices. This presents a solution to our customers. And within the 3M strategy of BTS Group, we are supported by the deep customer insight with the 40 million unique audience reach, privileged marketing and media platform and also the innovative products. Moreover, we also revised our short-term strategy to expand our agents base, improve broker operations, improve products and services and expanded selling channels until we meet our long-term strategy, which is to grow long-term premium to achieve sustainable profitability. Furthermore, in this year in 2022, we expect to reach our total premium at THB 2 billion. And in the next 3 years, we will strive to be a top 10 insurance company in Thailand. In the picture, either lively and energetic atmosphere of the rebranding event on the [ 76th July ]. It was 100 guests that joined the event is what -- such memorable events for the company. And as you can see the marketing and the media of the Rabbit Life in our healthier ecosystem. You can see our advertising on the business train with the VGI platform. On the billboard, we have [ Marco and Plan B ] platform and also the online platform. I hope that we will receive a good feedback from the investment community, too. And before going to the financial performance, may I accept our guests in the lobby. Come in, please. Okay. Coming to our financial performance. In this quarter, the company recognized the total revenue of THB 2.4 billion, a significant increase of 121% year-on-year, mainly due to the recovery of the hotel business and the tourism sector and also the higher recognition of the insurance revenue. The EBITDA stood at THB 1 billion, increasing 113% year-on-year. The increase in EBITDA was mainly due to the increase in operating revenue and the dividend income, also the other revenues. In this quarter, we are proud to present that our net profit are rising very much to THB 563 million, increasing significantly from the net loss of THB 102 million in the previous year. And the net profit margin in this quarter was the 23.9% compared to the net profit margin of negative 9.5% in the previous year. The improvement in the net profit margin was driven predominantly by the improved EBITDA, the reduced depreciation and a higher share of profit from SINGER. This is the result of long-term business transformation and investing in financial services businesses. Moving to the balance sheet. The bar chart on your top left-hand side shows the total assets as of the 30th June of 2022, of THB 75 billion, decreasing by 3.4% from the end of last year. The decrease was chiefly from a decline in cash and cash equivalents from the repayment of loan and a decline in asset held for sale largely from the disposal of Anantara Chiang Mai Resort and Spa in January 2022. However, the decrease in assets was partially offset by an increase in the investment property. Moving to the liabilities. In this period, the total liabilities were THB 34 billion, decreasing 6.8% from the end of 2021, mainly from the net decrease in liabilities that related to the asset held for sale, mainly due to the aforesaid Anantara Chiang Mai Resort and Spa, partly offset with an increase in deposits and advances received, largely owing to the rent received in advance from the Unicorn project. The total equity stood at THB 41 billion in this quarter, slightly decreasing by just only 0.3% from the end of last year. Moving to the water chart on your bottom left hand side, you can see that the cash flow of the company in this quarter, the ending cash of the 30 June 2022, was 106 -- was THB 1,656 million with a net cash of operating activity of THB 727 million. Net cash used in investing in activities of THB 581 million and net cash used in financing activities, THB 1,084 million. The company spent THB 4 billion on the CapEx and investment in the 6 months of 2022, primarily for purchases in long-term financial assets, investment properties, property, plant and equipment as well as the other investment. As for the debt structure in this quarter, the company has the total interest-bearing debt as of 30 June 2002, of THB 17 billion, decreasing from THB 18 billion in the end of 2021. The net interest-bearing debt ratio also decreased to 0.3 -- sorry, 0.35x compared to 0.37x at the end of last year. Coming to our last section, the operational update. Begin with our insurance segment, which is our new business under our new direction. In this quarter, we record a net -- sorry, we recorded a total revenue of insurance business of THB 373 million. 82% was from the premium earned and 17% was from the investment income. On the bar chart on the right-hand side, you can see the breakdown by premium-type which most of the premium earned are from the single premium and the renewal premium. At the far right-hand side, we show that most of the premium earned are from the wealth channel. However, we are in the process of acquiring more agents and also expand our selling channels. This will help us grow the premium earned to reach our target of this year at THB 2 billion. Moving to the CAR ratio. We show the capital adequacy of the company calculated by the total capital availability divided by the capital required. This quarter, the CAR ratio of Rabbit Life was 314%. If you compare to the top 10 company insurance in Thailand, which these risks with their latest exposure to the OIC, we will stand at #7 among the top 10 insurance company. And under the Financial Services business, in this quarter, the SINGER report, the net profit of THB 265 million, which we recorded a share of profit around THB 50 million. Moreover, in this quarter, we received the total dividend income from the JMART and SINGER of THB 253 billion. And moving to the right box, we see the performance of investment in JMART and SINGER -- it showed earlier -- Okay. Let's continue. Unrealized gain of SINGER was THB 2.0 billion, increasing by 27% and JMART was THB 2.7 billion, increasing 66%. All in all, the total unrealized gain from investment in JMART and SINGER was THB 4.7 billion. Moving to the hospitality business. The revenue of the hospitality increased year-on-year. Thanks to the easing of COVID-19 control measure across Thailand and Europe and also the recovery of the tourism sector also. This result in the higher ADR, average daily rate, and the occupancy rate and also the RevPAR compared to the previous year. This, in the owned and leased hotel, both overseas and Thailand, you can see that the occupancy rate increase in both Q-on-Q and year-on-year, thanks to the rebound of the hotel business. This in the -- and moving to the rental segment overview. The overall occupancy rate of the office building remained the same as the previous quarter at 88.4%. The Noble commercial building and the TST Tower remained occupied -- sorry, remained fully occupied at 100%, while the Gracechurch Street office building in London remained at 64% and is in the process of finding new tenants. Meanwhile, the occupancy rate of the commercial unit building already outperform that the occupancy rate remains 100% compared to the previous quarter. Coming to the residential segment overview. There are 3 ready-to-move-in condominium project under the JV with SANSIRI, which are on sale and include KHUN By Yoo, THE BASE Saphanmai and The LINE Phahonyothin Park. The total presale backlog in 2022 was -- sorry, the total presale backlog in 2022 was THB 1,555 million (sic) [ THB 1,355 million ] and during 2022 to 2025, the total presale backlog of THB 9 billion with aforesaid 3 condominium JV with SANSIRI and 6 projects under JV with Noble, named Nue Noble Ratchada-Lat Phrao, Nue District R9, Nue Cross Kho Khot Station. This project is the new project and very popular, the presale backlog almost 90% already. And the Noble Curve, which is the home town project; the Noble Curate, the housing project; and the Noble Create, the condominium project. While the project under development in this quarter, the Unicorn, Phayathai is nearing the completion at 78% and is expected to be completed in second quarter next year. While the installation of the Custom House [indiscernible] was at 10%, this project was renamed to the Langham Custom House Bangkok. And is expected to complete the construction in 2025. So this is our update on the financial and operational performance of the U City in this quarter. Thank you.