Rabbit Holdings Public Company Limited (RABBIT) Earnings Call Transcript

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

[Foreign Language]

And the IR team, [Foreign Language]. [Operator Instructions] So let's proceed with the financial highlights of the first quarter of 2025. For the first quarter of 2025, Rabbit Holdings recorded a total revenue of THB 1.5 billion, slightly down by 3% year-over-year with the Financial Service revenue doubling to 22.3% year-over-year. The company recorded a total EBITDA of THB 754 million, up 31% year-over-year and all in all, turned around to a net profit of THB 91 million compared to a year-over-year net loss of THB 130 million. As part of Rabbit Holdings' gradual ongoing journey to divest from its real estate assets and strengthen its Financial Services business as of date, the company recorded a total of THB 7 billion. Some of its already divested assets included European hotels, land banks in Thailand and office buildings across Thailand as well. The remaining THB 16 billion is expected to conclude within the coming years, which will include the European hotel portfolios and various office units in Thailand. For the significant event portions of the first quarter, the first significant is the conversion of RABBIT-P shares to RABBIT shares. There were no converted shares within the 8 and 9 conversion period. And as of the first quarter of 2025, RABBIT-P shares accounted for 24.3 billion outstanding shares and RABBIT shares at 7.4 billion shares outstanding. Moving to the last significant event, Rabbit Holdings had held its annual FY 2025 AGM last month on the 28th of April and out of nine agendas, all proposed agendas were resolved. Moving on towards the financial performance of this quarter, the company recorded, as I said before, total revenues of THB 1.5 billion, a slight decrease of 3% year-over-year due to lower rental revenue being down by 27% year-over-year or THB 99 million due to the rental fee adjustments, which occurred in the first quarter of 2024 and the disposal of TST Tower in the fourth quarter of 2025. Lower gain from exchange rate of THB 36 million, down 14% year-over-year. However, despite this decrease, hotel operations were up 7% year-over-year to THB 47 million, both due to recovery from tourism and higher revenue from the insurance business, up 47% year-over-year to THB 36 million from solid performances within the agent channel. Gross operating margin was 35% year-over-year to THB 736 million, and EBITDA increased to 31% year-over-year to THB 754 million. However, the company recorded a narrower share of loss of THB 43 million compared to a share of loss of THB 67 million in the first quarter of 2024. Overall, the company recorded a net profit of THB 91 million, mainly due to reduced expenses from the insurance business. Towards your right-hand side, you can see the total revenue contribution divided by segment. Real Estate business accounted for 67%, Financial Services contributed 15%, whereas others accounted for 18% of total revenue. Moving towards the performance analysis. From the waterfall chart on your left, total operating revenue was THB 1.1 billion, a slight decrease primarily due to rental fee adjustments of the European hotels in the first quarter of 2024 and disposal of TST Tower in the fourth quarter of 2024. Further down this chart, this was offset by FX gain of THB 231 million and finance costs dropping by 17% year-over-year to THB 270 million from loan repayments. The share of loss in this quarter was THB 43 million compared to share of loss of THB 63 million year-over-year, and the recorded net interest income was THB 55 million this quarter. After accounting for these factors, the company reported a net profit of THB 91 million, an improvement over the net loss of THB 130 million year-over-year, mainly due to lower expenses from the Insurance business. Moving on to the balance sheet for the first quarter of 2025, shows the total assets of THB 62 billion from -- compared to 60 -- a slight increase compared to December last year. The increase was primarily from investment properties associated with an office building in the U.K., property, plant and equipment from ongoing projects and real estate projects under development. Moving to the cash flow for this quarter, as of 31st March 2025, the ending cash was THB 2.2 billion with net cash used in operating activities of THB 303 million, net cash used in investing activities of THB 181 million and net cash used from financing activities of THB 122 million. Towards the right-hand side, there is the CapEx for the first quarter. The company recorded CapEx and property investments of THB 317 million for purchases in property, plant and equipment and investment properties related to the ongoing real estate projects. Lastly, for the debt structure for this quarter, the company has a total outstanding debt of THB 17.7 billion. And on the right-hand side displays the breakdown by currency, which Thai Baht is equivalent to 81% and the remaining accounts for 18% euros. For the portion of breakdown interest, floating rate was 93%, while fixed was 9% -- while fixed was 7%, pardon me. On the bottom, the company had a total interest-bearing debt of THB 18.6 billion for this quarter, slightly increasing by THB 266 million compared to the end of last year. While net interest-bearing debt-to-equity ratio was 50x, increasing -- a slight increase by 0.02 points from last year. Moving on to the operational updates. First up is the Insurance business. In this quarter, Rabbit Life remained ranked at #4 of market share in terms of sales via digital platforms and dropped to rank #17 in market share in terms of gross premiums. As part of its strategies to strengthen competitiveness and accelerate growth, Rabbit Life has set an ambitious year-end goal target of achieving THB 2.6 billion in total gross premiums. As of the first quarter of 2025, Rabbit Life had already achieved 18% of its total premiums already. Looking ahead, Rabbit Life's strategy for the second quarter is built around four key focus areas. First up is the sales and products. Rabbit Life is currently in the process of revamping existing products to align with the updated co-payment standards. The second one is investments. With the yield curve expected to fall, Rabbit Life will cautiously manage its approach and invest in low-risk assets. The third one is the operations and IT. There are a few projects which are in its initial testing phases such as e-Applications and e-Policy claims, which will be adopted in the next 2 quarters. Lastly, for others, Rabbit Life is currently exploring additional and new bundle offerings in collaboration with BTS Group's 3M platform via the Rabbit Rewards application with the aim of enhancing customer engagement and ecosystem integration. Moving towards the revenue performance from Rabbit Life. Rabbit Life had adopted the new Thai Financial Reporting Standard 17 or TFRS 17, which introduces a more transparent and consistent approach to accounting for insurance contracts. Under this standard, revenue and profits are recognized over the duration of the insurance policy rather than upfront. This accounting change had enhanced comparability across insurers to follow a standardized reporting system. Under TFRS 17, Rabbit Life's results are presented into two key components in the table as shown. First is the Insurance Service results and the Finance results. Initially, the Insurance Service results reflects the revenue earned from insurance policies sold, net of related claims and expenses, whereas Finance results fall under the investment income and gains/losses from investments. Performance-wise, for the first quarter of 2025, Rabbit Life recorded Insurance Service result loss of THB 6 million, mainly due to the residual impact of the lapsed policies from last year. However, this was offset by strong finance results of THB 49 million from higher interest income and gains on investments. After accounting for other expenses, mainly from finance costs, Rabbit Life recorded a net loss of THB 43 million, a huge improvement from THB 216 million net loss in the same period last year. The improvement was due to lower impact from lapsed policies compared to the first quarter of 2024. And towards on your right-hand side, you will see the breakdown of total gross premiums via channel breakdowns. The total gross premiums decreased by 17% year-over-year to THB 473 million from softer performances across the wealth channel, telemarketing and other channels, mainly from the economic slowdown and weakened consumer sentiment. However, due to Rabbit Life's selective recruitment of agents, the sales to the agent channel increased THB 26 million. Moving on to Rabbit Life's marketing campaign -- pardon me, marketing event. Rabbit Life had joined the Money Expo at IMPACT Muang Thong Thani during the 15th and 18th of May last weekend to boost visibility and strengthen its brand awareness as part of its marketing strategies and expand its customer base. During the event to draw in new customers, Rabbit Life offered exclusive promotions on site with new insurance policies brought at the event with chances to win special prices such as iPads, iPhones and various gift cards, along with limited edition Rabbit Life merchandise. This initiative has positioned the brand as an approachable and contemporary insurance brand within the life insurance space. Moving on to the second part of the Financial Service business under NPL & NPA Management managed by Prime Zone Asset Management. In this quarter, Prime Zone Asset -- Prime Zone's NPA portfolio consisted of 23 assets at a total cost of THB 81 million with each asset averaging at THB 4 million. In addition to that, Prime Zone joined the bidding process and acquired NPLs with a principal balance of THB 280 million and towards your right-hand side, Prime Zone's NPL portfolio is now valued at THB 1.9 billion, growing by 24% year-over-year with total collateral assets valued at THB 1.6 billion at the total acquisition cost of THB 1 billion. Performance-wise, the company -- Prime Zone recognized revenue from NPL & NPA Management business of THB 37 million and recorded cash collections from its NPL portfolio in the amount of THB 15 million. Lastly, under the Fund Management business, which is spearheaded by Metha Asset Management business, which Metha continues to strengthen its role as a key contributor within Rabbit Holdings Financial Services platform. After successfully achieving its ambitious year-end target of THB 10 billion in AUM or assets under management in 2024, owed to strategic capital allocation and fund management capabilities, Metha has setup a new goal of expanding its milestone to expand its AUM to THB 18 billion this year. In terms of performance, Metha delivered solid returns in the first quarter of 2024, generating THB 45 million in dividend income and recorded a net -- recorded a share profit of THB 3 million in the first quarter of 2025. This includes the Financial Services operations. I'll hand it over to my colleague, who will take you through the Hospitality section. Thank you.

Thank you, [ Kisada Hurin, ] and good afternoon, everyone. We are moving to Section 3.2 Real Estate that comprises of Hospitality segment, Rental segment, Residential Projects and Projects Under Development. Let's start with Hospitality overview. In terms of operational keys in this year, 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 715 million, increasing by 7% year-on-year, mainly due to the recovery of Thailand's tourism sector and performance from Eastin Grand Phayathai of The Unicorn. In part of revenue breakdown in this quarter, the owned and finance leased hotel and operating leased hotel were 92% and 8%, respectively. Apart from 1,819 keys, there are 78 pending keys, so the total keys are 1,897 keys for hotels in Thailand. In first quarter 2025, total revenue was THB 664 million, comprising of THB 606 million from owned and finance leased hotel and THB 58 million from operating leased hotel. Gross operating profit margin was 44%, increasing from 42% year-on-year. Our occupancy rate remained at high level of 80% in first quarter 2025 compared to the previous quarter last year. However, both average daily rate and revenue per available improved to THB 4,100 and THB 3,300, respectively, driven by the favorable location of our hotels. For hotels in rural, in first quarter 2025, total revenue was THB 51 million, remaining the same as the previous quarter last year due to the low season of European tourism with 38% of occupancy rate. As a result, gross operating loss margin was 9.8% and THB 2,500 of average daily rate. Let's move to the Rental segment that includes office commercial unit and hotel. For office rental, there are three office buildings with 35,000 square meters of net floor area, both overseas and in Thailand, including 33 Gracechurch Street located in London. The second is The Unicorn Phayathai, Bangkok and the last one, Noble Ploenchit, Bangkok. In terms of revenue on the right-hand side of the slide, office segment generated THB 61 million, decreasing from THB 86 million due to the disposal of TST Tower. The overall occupancy rate stood at 54%. For commercial units, this segment comprises of condominium commercial units across Bangkok, long-term lease buildings and commercial units under The Unicorn and the Area 22 with the overall net floor area of 21,000 square meters. The right-hand side is the performance of this segment, bringing revenue of THB 56 million with 99% of occupancy rate. The last segment of 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 expected to receive a rental fee of around THB 600 million to THB 700 million per year. As of this quarter, there are 16 European hotels, mainly in Germany. The next segment is Residential Projects. This quarter, under JV recently, there is clearly 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 LINE Sathorn. And in this year, the presales backlog amounted to THB 149 million solely from THE LINE Vibe. For our Projects Under Development, the first project is THE RESIDENCES 38, an upscale residential project located in Bangkok’s Thonglor district, Soi Sukhumvit 38. This building consists of 36 floor with 85% progress of construction, which is a combination of service apartment, residential condominium and F&B stores in 30,000 square meter gross floor area, expected period of completion by third quarter this year. The project highlights, Ananda Development have been appointed as developer to oversee the construction, development and sales planning of residential condominium. The total project cost is THB 4.9 billion, source of funds are a combination of bank loans and shareholder loans and cash cycle. This project consists of 36 floors, first lower [ floors and first three, ] amenity, including a gym and swimming pool, Level 4 is food and beverage, which will be operated and managed by Rabbit Holdings. Starting from the Level 12 to 23 will be the service apartments, which will be operated and managed by the 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 residence 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 condominium. Another project under development is the Langham, Customs House, Bangkok, luxurious 5-star 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 55% 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 tourism, expected commission date around 2026. So these are our update of Rabbit Holdings for analyst meeting in this quarter.