Minor International
Play
Still in growth phase Target THB18.90 Up/downside 26.0% Outperform
Target THB18.90
Up/downside 26.0%
Outperform
MINT continues down its aggressive growth path, funded by internal
cash flow from its well-diversified consumer and leisure business
portfolio. Overseas expansion also helps spread out business risk.
We believe the market
underappreciates MINT’s earnings
potential; this is a good buying
opportunity. We maintain our
forecasts and Outperform call with an
unchanged target price, still based on
16x CY13 P/E, 1SD below its five-year
historical average. We believe that
strong sequential earnings growth
will catalyse its share price.
More hotels under
management contracts
MINT plans to add more than 800
hotel rooms this year (+8%) and
1,300 rooms next year (+13). Most
will be under management contracts
to help reduce the capex burden over
the next couple of years. It also plans
to add more hotels outside Thailand
to lower market risk.
At the end of 2Q12, MINT had 9,838
hotel rooms with one-third in
Thailand and the remaining
two-thirds overseas.
To add about 330 F&B outlets
per annum
MINT plans to open about 330 F&B
outlets per annum over the next five
years via franchisees and in overseas
markets.
At the end of 2Q12, MINT had 1,274
food outlets with two-thirds in
Thailand and the remaining one-third
overseas.
With strong cash flow from the F&B
business plus the exercise of its
MINT-W4 warrant, we do not think
that MINT will need to raise capital to
fund its expansion plans.
Reiterate Outperform
We continue to like MINT for its
well-diversified business model and
solid earnings outlook. We view the
current weakness in the share price as
a good buying opportunity since we
are more bullish on its earning
outlook than the consensus.
As such, we reiterate our Outperform
call with an unchanged target price of
THB18.90, based on 16x CY13 P/E,
which is still conservative at one
standard deviation below its five-year
historical average.
