Well, I think it's time for us to start. Thank you everyone for attending analyst presentation for the second quarter results. The presentation today probably not going to focus much on the results, which you have already digested anyway. We will recap it a little bit at the very end of the presentation, but I would like to call out some of the recent developments, strategic move and other highlights that I'd like to call out that happened in the second quarter and also in the second half of the year as well. Have to do it in English, for the benefit of a lot of people online that dialed in as well. Maybe we start off with what the agenda is, recent development, as said earlier, strategic highlights and also financial highlights. Start with the recent development.
If you look at the new openings, in the second quarter, we opened seven hotels, and rebranded one property in the second quarter of the year. We further expand our asset light portfolio across both existing and new markets. If you look at the destination that we went to, we continued to deepen our presence in the existing markets that we already had our footprint, including Thailand, Italy, Australia, Zambia, and Laos in the second quarter. For Thailand in particular, we increasingly leverage brand conversions as an effort, route to expansion. We have Avani Koh Phangan and we have Colbert Collection in Samui. There are management contract conversions from other brands. I wouldn't mention what brand we converted from, but it also amplify our ability to show a capability that, gain trust from the owners and switch the brand to use our brands.
For Colbert Collection that I mentioned, also marked the debut of Colbert Collection in Asia. If you remember, we announced the four new brands last year in addition to the existing brands that we have. Last year, we announced The Wolseley brand, the Colbert Collection brand, Minor Hotels Reserve Collections, and iStay, if you remember. But now we make it happen with Colbert Collection debuted in Asia in Samui. In Italy, Tivoli Palazzo 1880 Lecce Hotel brings Minor Hotels portfolio in Italy to 60 properties already. It represent conversion from other brand as well. That particular brand that we convert to is elite brand. So that show that we can convince the owner to switch from another elite brand to our brand. In Australia, Avani Mooloolaba Beach Hotel is the first internationally branded hotel on Queensland Sunshine Coast.
In the past 40 years, that's the first international brand that happened in that particular location. So we're quite proud of it. In Zambia, Anantara Tented Camp Kafue River extends the Anantara brand, into a differentiated luxury safari experience in Zambia. This is the first tented safari camp, for Anantara brand. But if you recall, we have other tented camps elsewhere under other brands, especially Elewana brand that we work with the partner. But this is tented camp under Anantara brand. For Laos, if you follow us closely, if you travel to Laos before, you're probably familiar with Avani+ Luang Prabang, which is quite popular among us all. But we opened another one, an Avani+ Lanexang Vientiane Hotel just opened and becomes Avani second property in Laos. At the same time, we enter a new market, in Turkey through Anantara Kocatas Mansions Istanbul, in the city of Istanbul.
This is a brand conversion from another renowned international brand too. Mentioned the brand, but it show that we can convince the owner to switch to our brand. Finally, the rebranding of NH Collection, in Italy. We rebrand NH Collection into Porta Rossa Hotel Firenze, Colbert Collection in Florence. This is a well-known property under NH Collection for a while, but we rebrand into Colbert Collection, a new brand of ours, which demonstrate the flexibility of our broader brand architecture, providing owners with more options to join Minor Hotels' platform, under the brand best suited to their property and their positions. Next slide, we talk about the asset light pipeline. We try to accelerate the signed contracts. A lot of people ask whether we're on track. We've been delayed. We're ahead of the promise that we made to the investment community.
I have to say it's a little bit beyond our expectation. Our asset light strategy continues to gain momentum. We signed nine contracts in the first quarter of the year and 21 contracts in second quarter of the year, gaining stronger momentum the second quarter, bringing a total to 30 new contracts, new fee-based contracts in the first half. We remain on track to achieve more than 50 signings for the full year that we promised at the very beginning of the year. Now we are more than halfway through. The pipeline is geographically diversified across Asia, Middle East, and Europe. You look at some examples, in Asia, we sign new projects in Thailand and India, including Avani Koh Phangan. I alluded earlier, last slide, got Samui Colbert Collection, got the resort Colbert Collections, and Anantara Mussoorie, Zen Garden, and Anantara Varanasi in India as well.
That's some examples in Asia. In the Middle East, we strengthen our presence through signings in Egypt, Saudi Arabia, and U.A.E., including Anantara Soma Bay on Egypt's Red Sea coast, and NH Riyadh Prime Square Hotel in Saudi, and several Colbert Collection properties in the U.A.E. This is a conversion from another well-known brand as well in the U.A.E. In Europe, we secure opportunities in Italy, Switzerland, Hungary, all HMA or management contract conversions from local brands, further expanding our footprint in established tourism markets in Europe. That's Minor Hotels. For Minor Food, this slide's Minor Food. We're growing portfolio across brands and geographies. For our strong business, the focus remains on innovation, expansions, and creating new growth platforms. Firstly, we launch new concepts. Chicken Tendies. I don't know if you tried this concept. We have The Pizza Company, come up with the new crispy chicken concept.
We transformed the brand from food service dine-in into quick-service restaurant concept. We pilot certain number of the outlets that we have. You probably remember The Pizza Company, a more casual dining restaurant concept in the past with selling not only pizza, but pasta, salads, other dishes. But now we try to pilot certain concept with certain outlets that we have, scope down to quick-service restaurants with self-ordering kiosks or self-ordering stations. Menu items are streamlined for more operational efficiency, with serving time reduced in two minutes only for this concept. New product categories will be LongZilla chicken. It's a long pizza, long chicken, and long egg tart. We pilot one in Suvarnabhumi, outlet Robinson Suvarnabhumi. By year-end, we target to have this kind of key outlets of about 7-10 stores by this year-end.
By next year-end, we hopefully will get to hopefully 100 stores for this concept. That concept will transform and increase and drive TPC sales under our strategy. That is The Pizza Company. We have some new brands in Singapore, Kaji, a contemporary Japanese-Western dining in Singapore. We come up with new concept, Bake It Babe, in Singapore. It is a Bangkok-originated premium banana cake concept. We do have this cross-territory, cross-country expansion with different brands. Product innovation remains a key driver for us with strong launches across several brands. You probably experienced and heard about this new launches, Bonchon's new ramyeon, rice series, K-Pork, not K-pop. K-Pork, Korean pork offerings, drove both same-store sales growth for us and transaction growth, demonstrating the sales growth was driven by higher customer traffic rather than easier lever of price increases. With Jazz Up Sizzler, we have Sizzler Special concept.
It is an elevated salad bar concept, which was a key contributor to strong same-store sales growth for Sizzler. Swensen's and The Pizza Company benefit from successful menu innovations, including if you went to Swensen's, I just went one yesterday. We have Young Coconut & Pandan Series by Swensen's. Also at The Pizza Company, we have Croissant Pizza. We never stop innovating with new products just to jazz up and create excitement in the market. Dairy Queen and Swensen's, if you notice, we capitalize on the very growing gelato craze with the launch of their Ultra Smooth series, helping both brands achieve nearly 20% same-store sales growth. We just capitalized that very quick. Some bio drama that happened over one weekend, and we did it over that same weekend. That results in a very impressive sales growth for these two brands. Next slide.
It is still Minor Food. We are still growing portfolio across geographies. Branded height momentums also continue in Thailand and international markets. In Thailand, we continue to roll out Swensen's, The Steak & More, Dairy Queen, and GAGA. It is still our driver in Thailand. Internationally, we continue to roll out in Singapore, Vietnam, Indonesia, and India across several brands. I would not go into detail. You probably have some details in the slides already. If it is in the interest of time, I am just going to focus on high level. Another important milestone this quarter was our partnership with PTT OR. We are targeting more than 150 outlets under The Pizza Company, Dairy Queen, The Steak & More, and we create new brands just for OR called Chiho Ramen. This will be in PTT OR stations nationwide.
This provides a highly efficient way to expand multiple brands using an attractive capital light model and strong partnership with another prominent company in Thailand. Minor Food also entered into an agreement to acquire. This is the news that we released, I think, before public holiday yesterday. We entered into an agreement to acquire ownership of Bonchon's intellectual properties rights outside the Americas, which include eight Asian countries. I think currently we have about 345 stores. In Thailand, the Philippines, Vietnam, Myanmar, Taiwan, Laos, Cambodia, and one to come in Malaysia. The acquisition is financially attractive and strategically aligned transaction with Minor Food asset light strategy with a net investment of $50 million, or roughly about THB 1.6 billion . The transaction, I have to say, will be earnings accretive from day one, and supported by Bonchon's highly franchised and royalty driven business model.
Going forward, we will see further value creation through network expansion, franchise growth, and Bonchon integrated sauce supply chain. We get the manufacturing capability of their sauce as well. The whole thing will produce us with the recurring royalty fees as well as the proprietary sauce sales for us. This opportunity emerged when the owner decided to divest the global IP, a rare event in the market, so we have to seize this opportunity. Given our seven-year track record successfully operating Bonchon here in Thailand, we know the brand really well. We were able to acquire it at a valuation and return profile that met our ratios, so we seize such opportunities.
CapEx did not really go up because we streamlined down, trimmed down other CapEx of ours. I will talk about it later on that our CapEx amount or level this year remained the same because we trimmed our CapEx somewhere else just to get this CapEx to acquire the opportunity that we cannot refuse, which will drive out the return and accretive to our earnings on day one. So we have to seize that. We are buying ownership of one of the leading Korean food brands globally outside the Americas. You know how successful we are in Thailand. We are going to replicate such success elsewhere. The value comes from royalty stream, as I said, franchise growth rights, and intellectual property ownership, and long-term brand expansion. Moving on to 2026 and beyond, our aspirations. Just to recap, we talk about this slide many times in the past.
Just want to recap. Overall performance for this year, 2026 is expected to remain above prior year levels, I will say, supported by relatively resilient operating performance despite geopolitical uncertainties that we all have seen related to Iran, Middle East situation. Meanwhile, our medium-term aspirations remain unchanged. So, we target by 2028 to reach approximately 850 hotels and 4,150 restaurants, including signed contracts too by the end of 2020. That still remain our target even though a lot of things happened this year. This expansion will be driven by a combination of asset-light growth, as I said earlier, selective new market entry, and deeper penetration in high growth regions too. Financially, we are targeting a high single-digit revenue growth, as I said, 15%-20% annual profit growth on a three-year CAGR basis, an ROIC of around 12%. That remain our target, like CAGR three-year.
Whatever happened this year and we would probably going to try to drive the three-year CAGR at the level that we commit to the market. At the same time, remain focused on balanced sheet strength, subject to successful execution and timeline of value unlocking exercise initiatives or asset rotations. We talked about it in previous quarters as well. Subject to this and subject to market conditions and all, we still target net debt to equity in the range of 0.75x-0.85x and net debt to EBITDA to 4x, below 4x. Just a matter of timeline and market windows for us to execute at the best timing and best financial parameters and metrics for us. Next slide. I just want to talk about margins. As we continue to grow, maintaining margins still remain a key priority amid ongoing cost inflation across several markets.
As you all know, with this Iran-U.S. crisis, we have to deal with top-line and we have to deal with cost, but I have to say that we remain resilient on both. In terms of cost, labor represents our largest cost category at about 28% of our revenue base. We are managing this through demand-based scheduling and productivity initiatives, process standardizations, and greater use of automation and digital tools. As a result, we expect labor cost inflation to be contained at mid-single digit levels. Direct costs, including raw materials, logistics, packaging, and energy, account for about 24% of revenue. We continue to mitigate pressures through procurement efficiencies. I think we talked about it before. Dillip talked about it last quarter. We have a very proactive central supply chain management to negotiate and have some bargaining power with our suppliers. We also diversify our supplier base as well.
Inventory planning, logistics optimization, and menu re-engineering, and selective pricing actions for certain products, that help us too. In Europe, in particular, where energy costs remain a key area of focus, I have to reiterate this, more than 90% or up to 100% of energy requirements have been hedged. If you remember, we talked about it before. This provide cost visibility and reducing volatility for us. Overall, direct cost inflation is expected to be manageable with low single-digit increases. Considering that we still managed to increase our top line or RevPAR or food total system sales growth. You have to see in latest slides, we start to see good traction in terms of same-store sales growth in the primary market like Thailand as well. That will pretty much protect our margins in this current environment.
If you look at other player in the market, margin gets squeezed, but we try our best not to see margin coming down. At least protect it at the same level. Lease expenses represent approximately 7% of revenue. We continue to increase the proportion of variables. Lease structures where appropriate to provide us with greater flexibility during periods of volatile demand or soft demand. That is margin. Next slide also talk about margin as well, 2026. It is about protecting and maintaining margin, as I said, amid external cost pressure. While 2027 onwards should mark the next phase of margin expansions. From 2027 onwards, we expect initiatives we mentioned earlier to increasingly translate into margin expansion. This will also support by greater contribution from asset-light business model because it provide us with higher margins normally compared with other business model, and also fee-based businesses too.
That will further operating efficiency, digitalization, and lower financial leverage. That will help protect our margins. Next slide, just to highlight some of the enterprise technology and digital initiatives on our side. Technology is still a core margin lever for us, not just a cost line. It supports both our efficiency agenda and our customer strategy. It is central to how we get to our medium term to long-term margin and ROIC targets. Oftentimes we talk about margins in terms of cost of raw materials, cost of labor, cost of lease, and all that. But longer term, we overhaul, streamline, transform our back office just to make it scalable, standardize it in a way that create more efficiency and reduce cost and improve margin over the long term. Something that I would love to share with you, too. We have two core pillars.
We have a lot of work streams now within the organization, but I just scoped down into just two core pillars just for you to easily understand us better. Back-of-house, drive fiber cost out and scalability, and customer-facing, drive revenue and loyalty. We have AI layer on top, which is embedded across both pillars. So back-of-house efficiency and cost leadership as I think I shared with some of you before in several meetings, we have done enterprise platform modernization. We migrate our ERP system from EBS to Oracle Cloud. The journey that we've done for a year or two, and we're still in the middle of it. We're standardizing finance, supply chain, reporting. We are embarking on enterprise performance management, which will automate our reporting system globally, because, you all know, we have operation in different geographies with different system, with different reporting framework.
Now we try to streamline everything to be one global standard for the sake of standardization, which will have the financials or the reporting in time in a very quick manner for us to make decisions faster. That will help. We're targeting at least 20% process efficiency gains from this exercise. Secondly, we have vendor AI and outsource that let us scale without scaling costs. We're shifting activity to lower cost hubs. We have a business process outsource. We outsource some of the transactional activities to India. Accenture help us with this. So, some of the examples like outsource transactional accounting. We're also partnering with major consultancy for complex works. We overlay this with enterprise-grade AI on top to lift productivity and eliminate operational pain points so the efficiency gains keep building. For customer facing, we have done hyper-personalization.
We have said it many times about our dynamic pricing strategy. We have dynamic pricing to optimize revenue in real time. We have contact center overhaul and use AI to improve response time and reduce service failures. It frees our agents to focus on upselling and experiences instead. We personalize service and targeted marketing, move us from mass to one-to-one engagement, the right offer to the right guest. I have to say, we have quite a few projects underway now, but I have to share with you that the transformation's happening and we're going to see the result of this transformation in no time. The gift data platform also ties together data is something that we think it's critical. Customer insights will drive conversion and enhance loyalty platform, which also support our direct bookings and sales through our own direct channels as well.
These initiatives, I'd say, is not just about cost-cutting or cost savings, but they're built a more scalable, data-driven, and customer-centric platform. The standardization in a unified platform, global unified platform instead of fragmented all over the place. This unified platform can also help support our growth and ambitious expansion plan that we aspire. Next one, Minor Hotels expansion pipeline. We talked about the past before, now we talk about the future. Our expansion strategies remains intact, prioritizing quality over quantity. Not just that we have to get the number of managed contracts to the point where we aspire, but we want high-value contracts too. Not just a contract, but high-value contract. We remain confident, in achieving at least 50 contracts signing this year, and we have already signed 30 contracts so far, as I said, in the first half.
More importantly, the Middle East conflict has not disrupted our discussion or contract signings with asset owners, as the region's medium to long-term growth fundamentals remain compelling in our view for Middle East. In fact, more than 40% of our hotel signings in the first half were in the Middle East, demonstrating continued owner confidence and strong demand for our brands. Next slide, feature some new hotel openings that will happen in the second half. This is just some examples. The pipeline's already translating into openings now. In the second half, we expect at least 11 additional openings. We only show six pictures with the limited space that we have here. The 11 additional opening across eight countries and five continents, showing how our brands are expanding globally across region and segments. Most of these are managed and franchised properties supporting our asset light strategy.
In Europe, we'll further strengthen our presence in Italy and we are entering Malta for the first time. Across Asia and Indian Ocean, we're adding properties in Malaysia, China, and Australia. In the Americas, we're expanding into Mexico and entering into the U.S. I think this slide show you The Wolseley in New York, Colbert Collection, a Colbert Collection in U.A.E., Anantara Xiling Snow Mountain in China, NH Residence Guadalajara in Mexico, and Anantara Shaoxing in China. The first Malta entry, which is NH Collection Sliema. So that's some examples of new hotel openings that are going to happen, at least in the second half of the year. I would like to talk about the outlook on the book that we have. Looking into second half of the year, our on-the-book positions is encouraging still, although conditions differ by geography.
In Europe and the Americas, which remain our largest earnings contributor and on-the-book revenue still ahead year-on-year compared with same time last year for both third quarter and fourth quarter. Demands are supported by resilient intra-European leisure travel and strong events calendar across several of our major markets. In Asia, booking trends in Thailand and the Maldives continue to indicate year-on-year room revenue growth too. While optimizing and adapt to commercial strategies to local market conditions too. In the Middle East, represent a limited share of earnings contribution. While geopolitical volatility may affect the hotel performance temporarily, our exposure is limited and largely asset light, but nevertheless, as I said earlier, long-term opportunity in this region remains intact. We still believe in long term of the Middle East region, barring what's happened currently, but over the long term, still going to be a strong contribution for us, too.
For Oceania, like Australia and New Zealand, on-the-book revenues also ahead of same time last year. Majority of demands come from Australia and New Zealand, and we have seen consumer and business confidence begin to recover, since July the year. Next slide. We talk about branded residents before last quarter. I just want to update a little bit. It's another important growth avenue for Minor Hotels. We currently have a pipeline of 29 projects across 15 countries, combining owned and joint venture developments with a much larger fee-based pipeline. On the left-hand side, our selective owned JV projects provide high IRR of up to 30% in some cases, where we believe the returns justify the investments. At the same time, the pipeline of fee-based branded residence project is expanding.
The fee-based project, I think on the right-hand side, span the Middle East, Africa, Asia, Pacific, Europe, and the Americas, with estimated residential fee currently of approximately $65 million over the project pipeline. This allow us to monetize our brands and operating expertise while generating management fee with no capital deployment. The flow through of this fee will go to our bottom line with a high margin and ROIC. That's residents. Now, I would like to touch a little bit about food growth expansion. Similar to hotel strategy, our asset light expansion remains central to Minor Food's growth model. By 2028, franchise outlets will account for a larger share of the network, supporting margin stability and strong cash generation. The mix, which are currently owned split higher than franchise, but we're going to reverse the split in the next three years.
Having more franchise, more higher margin business model, have a higher mix for us. Geographically, we are prioritizing high growth markets, such as Indonesia and India, alongside continued expansion in Thailand and broader Southeast Asia. Next slide. Growth strategy, for Minor Food, can be summarized. I'll say I would frame it around on total system sales growth. Look at total system sales growth. It's a function of same-store sales growth and outlet expansion. The first component is same-store sales growth. We're driving this through new brand concepts, menu innovation, marketing agilities, and new store formats. New brand concepts, Swensen's The Creation, which offer a more personalized customer craft ice cream experience. I don't know if some of you have tried before. TPC Chicken Tendies, I talked about it earlier, the quick service concepts extend the brand into the QSR segment.
Sizzler Special and Sizzler Sun & Moon, which demonstrate the elevated salad bar offerings, with the Sun & Moon introducing differentiated day and night menus from the Sizzler's Sun & Moon. You've got to try. It jazz up the excitement and even the brand has been around for so long. This effort has made the brand fresh all the time. Menu innovation, continued product launch across key brands, including Bonchon. I talked about it before. Rice bowl series, K-Pork, Dairy Queen, Belgian Chocolate, Ferrero, The Pizza Company, Croissant Pizza, and, marketing agility. I talked about it already. We ride on market trend fast. Introducing Dairy Queen, Swensen's Ultra Smooth Series, and we will keep continuing to ride on trend. Any trend, any craze, any viral, we capitalize on that in a very timely manner.
New store formats, Dairy Queen's modular and TPC modular format, which have lower CapEx, longer operating hours, and higher sales per square meter, and also TPC Express concept, which also increase occasions to individual servings, will help drive same-store sales growth for us as well. These are just examples of how we drive or propel our same-store sales for Minor Food. Second component which drive total system sales is outlet expansion, in which the majority will be through franchising or asset light. We're expanding our new store formats and geographic footprint through both domestic and international outlets. Domestically, we continue to scale brands such as Dairy Queen, The Steak & More, GAGA, Bonchon, The Pizza Company, and Hudson's. Internationally, we're expanding into markets such as Indonesia, Vietnam, Laos, and India. The third is creating and scaling new brands. We built new brands.
Well, we talked about The Steak & More before. Now we scale it up to more than 10 outlets now. We have other new brand, THE STONE, an Udon brand, Grub Grub Station. I don't know if you try it, or some of the new brands that happen outside Thailand, like Dim Sum Club or Kaji in Singapore. We crank out new brands all the time. With this competitive environment, with new concepts coming out, we never stop innovating or refresh our existing brands all the time. All right, that's growth strategy. As I said, you have probably seen our results before, second quarter results and first half results. I just want to recap very quickly. We deliver core revenue of THB 82.8 billion, which represents a 3% year-on-year increase.
This was driven by stronger performance across the owned and leased hotel portfolio and mixed-use operations as well, and restaurant business as well. Looking at the core net profit, we achieved THB 3.7 billion, which is a growth of 6% year-on-year from ability to capture demand and operating discipline, which help absorb higher operating costs across selective revision. As a result, core net profit margin improved by 10 basis points year-on-year. Now I'm going to scope down to each business unit, starting with Minor Hotels. In first half 2026, RevPAR, I'm starting with the operating stats first. RevPAR increased across most of our major regions, both in first quarter and also in second quarter. I have to say, second quarter, I would frame it as a resilient quarter.
Despite everything that happened, we still managed to get our RevPAR growth across the regions, especially our bread and butter like Europe or even in Thailand. For owned and leased portfolio, Europe and the Americas, RevPAR increased 5% year-on-year in euro terms, led by ADR growth. In July, we've got the number. It also increased also by 5% year-on-year in July in Europe. Italy remain a standout market, benefit from major events such as Winter Olympics in the first quarter in Milan and Italian Open in Rome, as well as continued leisure demand as well. Meanwhile, Spain and Central Europe also recorded solid growth as well. For Thailand, RevPAR also surged by 11% year-on-year, driven by room rate uplift and targeted sales initiatives which focus on high potential source markets. Resorts of the Nation continue to outperform the broader market.
This is supported by resilient leisure demand, and strong appeal to both domestic and international guests. The Maldives increased 4%, supported by higher occupancy and diversified feeder market mix. In Australia, RevPAR was slightly softer, down by 1% only. Stronger performance in Sydney and New Zealand was partially offset by softer results in Melbourne and Brisbane. So where fewer major events compare with the same time of last year, that's the reason why we saw a slight dip in RevPAR in Australia. Financially, core hotel revenue increased 3%, supported by improved performance across owned and leased hotels and mixed-use. In terms of profit, it increased 7% to about THB 2.4 billion. Let's shift to Minor Food performance. It delivered 4% year-on-year growth in core revenue in the first half, supported by top line growth across all key hubs, including Thailand, China, Singapore, Australia.
We saw all improving revenue or top line. Moving to operating metrics. Thailand delivered positive same-store sales growth of 0.8% and total system sales growth of 4.3% amid concern on macro background and everything. We still manage to be up our same-store sales growth within total system sales growth. Brand momentum was led by Bonchon, Dairy Queen, Swensen's, supported by product launches and network expansion as well. China performed strongly as well. Same-store sales growth up 8.2% and total system sales growth 8.6%. Growth was driven by higher traffic, broader custom base, strong brand awareness, effective marketing and social media engagement, and product innovation, including additional protein options of wider range of grilled fish sauces. Earlier this year, we launched what we call Riverside 2.0.
They include new menu, new store design, more efficient operation, and these results have been more than, I will say, 50% above our internal sales target, beyond our expectation. We are now rolling out this format across the rest of the network in China as well. In Singapore, same-store sales were softer, but total system sales increased by 5% as we continue to expand the network and introduce new brands. Let us just say Singapore is a very fast, dynamic market. We have to keep producing, launching new brands just to keep up with the trend and the competition in the market. Total system sales probably matter more to same-store sales at this point. Australia saw higher average ticket value and stronger growth from Nomad, our coffee roasting manufacturing.
Total system sales and same-store sales were nevertheless impacted by lower franchise store base and softer transaction volume, reflecting cautious consumer spending and ongoing cost of living pressures in Australia. On the bottom line, Minor Food Corp profit was up 3% to THB 1.3 billion , despite a challenging consumer background. I have to say, second quarter gaining more momentum than first quarter. Profit grew by about 5% in the second quarter. Slide 24, CapEx. I alluded to it earlier when I talked about Bonchon. For 2026, we expect total CapEx of about THB 15 billion-THB 16 billion , pretty much the same as we expect in the previous quarters. We have cut down some unnecessary and low-priority CapEx, and we also deferred certain CapEx, particularly at MSGA, which officially offset the incremental CapEx associated with the planned Bonchon acquisitions too.
Our capital deployment focus on value creation still. The key area of investment in good ROI-driven and margin-enhancing asset maintenance and upgrades. Capital efficient. Branded residence that I talked about earlier, where we capture both development returns and fee upside, so we have to invest in that. Highly selective expansion in high-growth markets and organization-wide efficiency and transformation initiatives, including digital and operational enhancement as well. Next, balance sheet management. Finally, this is one of still our key priorities. Our net interest-bearing debt to equity stood at 1.1 x and net debt to EBITDA at 4.72 x at the end of second quarter. I have to say higher from the end of 2025. This was mainly due to higher borrowing and a lower equity base following the perpetual bond redemption in the second quarter.
As you all know, we talked about it, discussed it in the previous quarter too, as well as additional funding for working Cap requirement during the seasonally low period in Europe in the first quarter. We will continue to strike the right balance between growth opportunity and deleveraging. We continue to, I'll say, proactively find ways to reduce leverage through operating cash flow generation, proactive CapEx management, and optimized funding. Now we currently evaluate asset rotation opportunities to unlock capital from mature assets, improve capital efficiency, and generate additional proceeds for debt reduction. These initiatives I expect to strengthen the balance sheet while preserving financial flexibility to support long-term growth. The capital unlocking exercise is still on the card, on the way.
We are working on so many work stream, but maybe we won't be able to disclose a lot of detail about it because it could have some impact on our negotiation process and the return, the price that we like to succeed. Rest assured that we're working on several asset rotations to bring down the debt, and it also depends on the market window, the timing. We're well aware of the situation we're in today, the volatility in the market, the situation in the Middle East, and that creates some volatility and disrupt the market window that we originally planned. Depend on that, which is still something that we have to monitor every day.
The deleveraging still on the card for us, and it still remain our high priority for us. Note that in the second quarter, average cost of debts declined to about 4.1%, down from 4.4% in the same period of last year. I think that's it for presentation slides here. Now I'll open to any Q&A that you might have. We're open to Q&A from people online as well. Yeah. Online. Okay. Let's see in online.
Questions from online. The first question is on core net profit margin in 2027. Why does the core net profit margin target in 2027 increase from 2026? Could you walk through the drivers of this expansion?
Well, a few catalysts to expand our margin. Definitely, as a life business model that we always highlight will help expand our margin and profitability. Also, our effort to have more sales and revenue coming through our own direct channels, bypassing commissions that we have to pay to the middlemen. That also help improve margins. Thirdly, the efficient gains, productivity gain that we get from the back of house, cost protection, the transformation in terms of, I highlight in one of the slides earlier, the ERP system, the business process outsource, the automated EPM systems, the standardization of the work process overall. We've increased efficiency and productivity gains that will help expand margin as well. We'll see margin improvement. Actually, we are seeing margin slightly improve year-on-year in the first half already.
Not very much, but I would consider it as a good margin protection in the middle of this whole thing that happened around the world already. We still managed to protect our margins, but barring this whole situation going forward with the effort and then with the catalyst, as I just mentioned earlier, the 2027, 2028, we still aim for margin expansion. We have the magnitude of it under our three-year plan, but I wouldn't be able to disclose. As I said, even the hardest hit quarter in second quarter of this year, we still protect our margin, our margin improves slightly. Rest assured that in the second half, where we see top line on the books still fare better year-on-year with the same time last year, we're not going to see margin erosion.
We're probably going to see margin expansion in three years as well. Anyone in question or so clear there's no question.
More questions from online. This is about Bonchon acquisition. There are around four layers of questions under this topic. The first one, what is the expected contribution from Bonchon IP? What's the threshold of return that we mentioned that the deal looks financially accretive? Two questions.
Right. Well, I have to say, we use the word entering, and the transaction will close at the end of the month. Since the transaction hasn't closed yet, exact number in detail probably wouldn't be able to disclose. But rest assured, the return ROIC, it's double- digit. IRR, it's high double- digit as well. And earnings accretive right away. I'll say EPS, if you look at MINT overall of THB 10 billion net profit, and earning accretive will be hovering around low single- digit accretive growth. That's all I can say now. But rest assured, longer term, we acquire, we transform, and we scale always. We are going to see more momentum of Bonchon acquisitions, which will contribute more to our P&L. But on day one, as I said, it's going to increase our profit right away around low single- digit.
Long term, with the success that we have in Thailand, we have about 130 something outlets in Thailand, and now we have the Philippines, Indonesia, Vietnam and all that, we're going to replicate the success that we have here throughout the rest of the world, exclude Americas. So I think that's the beauty of having Bonchon IP globally now.
Two additional questions about Bonchon acquisition. Could you please elaborate on Bonchon expansion plans going forward? And how is the interest of Bonchon franchisees in the international market at this point in time? That's the first question.
Well, we capitalize a lot of things from Bonchon. I have to say, our investment rationale, it provides us with asset-light franchise platform, deliver strong capital efficiency, and it's a Korean fried chicken which stand out in terms of differentiated proposition, support by the popularity of K-pop or food culture. Not in Thailand, not only in Thailand, around the world. So we capitalize in that trend as well. And they have well-defined pipelines supporting growth. I have to say, for that at the moment, roughly, Bonchon outlets around, exclude Americas that we have, it's 300, I'll say 345 outlets now. We scale it up. Hopefully in the next five years, we get to 500 or more at least. So that's something that we want to scale up.
If you look at the footprint that we have on the food side, not Bonchon, but on our Minor Food, where we have footprint in other parts of the world, we could also have the rights to expand Bonchon there as well. I think that is something that we think is worthwhile acquiring at the moment, but we still maintain financial discipline by trimming down other CapEx elsewhere to maintain our CapEx and debts not to be higher than what we originally anticipated.
Final question on the Bonchon acquisition. Would you say Bonchon brand has been a success since the Thai unit acquisition in 2018? How would the success be measured?
Well, this can be measured by a lot of variables. The profitability and the performance, it exceeds what we originally plan or propose to our committee. If you look at the stats in terms of same-store sales growth, Bonchon has shown a very good turnaround. In the second quarter and then in six months, I will say Bonchon same-store sales growth hover around 5%-7% in the first half of 2026 in Thailand. July is still showing positive same-store sales, strong positive same-store sales growth. We acquire it, and during the COVID, Bonchon helped us with the delivery and with the cloud kitchen. We turn some of the outlets or somewhere in the shop house to be a cloud kitchen, and Bonchon become popular as a delivery brand during COVID, and it helped us went through COVID successfully with Minor Food exhibiting profit during COVID.
Hotels losses, Minor International losses, but food group still making profit during COVID because of the delivery that we have, including Bonchon as well. After COVID, with Bonchon resonate as a delivery brand, we try to convert into a dine-in brand now and successfully done so. We come up with new menu, not just fried chickens. We have ramyeon, we have hotpot, we have Korean cuisine in Bonchon. So you can go to Bonchon and enjoy not just fried chicken and other things that we innovated over time. I think that was a success, and that is why we can still sustain positive same-store sales growth. I think 5%-7% same-store in the first half, it is quite something in the middle of this market condition. If you look at other player in the market, they still see same-store sales in a very suppressed figures. Okay, anything else? Okay, more.
More question. Can you mention about the debt level and cost of debt trend in 2026 and perhaps in the first half of 2027 as well?
Well, the debt trend, it went up because of the redemption of U.S. dollar perps. That used to be booked or recorded under equity sections. But once we redeem this perpetual bond using debts, that recorded in the liability section instead. Also interest will move from equity section to P&L as well. Nothing changed cash-wise because the debt's there, but it's just the movement in our financials. But as I said, we continue to focus on de-leveraging using not only cash flow from operating activities. We are currently evaluating asset rotations. With that coming through, a few asset rotation and capital unlocking exercise that we modeling right now will help improve leverage ratio once the timing and the market window open for us. But we are so committed in terms of de-leveraging at this point.
For cost of funds, if you remember, in 2024, it was 5.14%. We reduce it down to 4.29% in 2025. In 2026, we are anticipating it will come down further, maybe from 4.3% to about, I will say 4.1%- 4.2%. Slightly down, but you have to bear in mind that now the benchmark rates, it's probably going to stay this level longer. Probably not going to see interest rate coming down quite significantly. But we see that it's not going to go up substantially either in the rest of this year. Next year, we have to see. But I will say, next year, we conservatively project around the same level or slightly higher. Okay. Anything else?
Okay. Well, if you have any other questions after, our IR team's here, I am here, and we open for more question through email, and we address all your concerns and questions with the IR team and myself. Thank you very much for attending. Thank you.