Minor International (MINT)

Minor International Plc (MINT)

Q2 2012’s net profit projected at Bt436mn, growing 56% yoy

We estimate Q2 2012’s net profit of MINT at Bt436 mn, the growth of
56% yoy due to 3 reasons as follows. 1) The hotel business has
recovered continuously following the tourism industry. As a result,
average occupancy rate (Oaks excluded) has increased to 55% from
49% in Q2 2011, while RevPar has grown by 20.5% yoy. Moreover,
there was recognition of revenue from Oaks Hotels & Resorts in
Australia for a full quarter at least by Bt1bn, compared with in Q2 2011
that MINT could recognize revenue from Oaks for only 1 month. 2)
For the property development business, MINT would book revenue
of Bt460mn from a transfer of St. Regis condominium (B200m) and
Timeshare business (Bt260mn). 3) For the food business, same-storesales
have grown by 6.5%. Combined with the number of restaurant
which has increased by 105 from Q2 2011, or 10 from Q1 2012 to 1,274,
the business would grow totaling by 13.6%yoy. Overall, we estimate
operating profit in Q2 2012 of MINT at Bt7bn, increasing 20.5% yoy,
while net profit margin would rise to 6.2% from 4.8% in Q2 2011.

Maintain forecast. 2nd half 2012's outlook still thrives continuously from every business

Earnings in 2nd half 2012 tend to grow continuously. The hotel business
would brighten along with recovering tourism industry that supports
all hotels to be able to fully generate revenue. Especially, new hotels
like Maldives and St. Regis began to have better earnings after
starting a full operation for the first year. Combined with Oaks which
has high occupancy rate, the hotel business would grow notably. In
the first 15 days of July, average occupancy rate of the business has
enlarged by 3%yoy, while room rate has increased 7% yoy. For the
property development business, there would be revenue recognition
from Timeshare business at B600-700 mn (compared with Bt330 mn in
2half 2011) and from a transfer of St. Regis condominium at Bt300-400 mn
(5-7% still awaiting transfer). Together with the food business
which has grown along with the economy and aggressive branch
expansion, as well as a chance to receive remaining insurance
claims (before tax) at Bt120 mn, operating profit in 2H12 would grow
remarkably from 2nd half 2011 and thus boost operating profit in fiscal year 2012 to
Bt2.96 mn or the growth of 43% yoy.

Buy on price weakness. 2012’s fair value is Bt16.00

New 2012’s fair value, using DCF-WACC at 9.4%, is Bt16.00.
Although the upside is small at only 4%, the company still has
strong business fundamental and growth potential from future
acquisition plan. Reiterate “buy on weakness”.