Minor International

Minor International Plc (MINT)

Q2 2013 net profit projected at B452m, growing 24.3% yoy

Q2 2013 profit is projected at B452m, growing 24.3% yoy. Operating income is
projected to rise by 8% yoy, or B7.842bn. Income from hotel business
(34% of total income) would rise 5% due to hotels' self-invest operation
with REVPAR rising 10% yoy. Moreover, additional income from 2 new
hotels in Vietnam with 159 total rooms acquired on mid-1Q13 is projected
to compensate for the April-November 2013 renovation of 2 hotels with 156
total rooms and Oaks' 7% yoy decline in REVPAR. For property business,
B620m income is projected to be recognized; B200m from transferring St.
Regis and B420m from Timeshare project. For food business, though same
store sales grow only 1.1% (Pizza Company changed sales strategy, so
there was no promotion to boost sales like the rivals. The growth would be
3.7% excluding Pizza Company), if 145 new branches of restaurants from
2Q12 (or 13 branches from 1Q13) are included to 1,419 branches, partially
from taking over Riverside, China (49% proportion) since December 2012,
overall food business is projected to grow 13.9% yoy. Gross margin is
projected at 56.7%. As effective tax rate fell to 20%, net profit margin is
projected at 5.8%, improve from 5% in 2Q12, but falling from 15.8% in
1Q13 mainly due to seasonal effect of hotel business.
- Maintain forecast, 2H13 likely to grow from every business
2H13 is projected with good growth. Hotel business would grow along with
tourism, as well as continuous increasing income from new 2 hotels in
Vietnam and upcoming opening of a new hotel under investment, Anantara
Phuket, and 8 hotels under MINT's management. Moreover, share of profit
from affiliated companies would be recognized after holding share in 3 new
hotels in early-July. For property business, income from transferring 10-
12% of area of St. Regis at B600-800m value is to be recognized, and
Timeshare project is projected to make income according to the amount of
rooms with right to stay. For food business, growth is projected mostly from
expanding new branches, as well as Riverside's full year revenue
contribution income after acquisition over in late-2012. Overall, we
maintain FY2013 net profit forecast at B4bn, growing 18% yoy.
- “BUY”... FY2013 FV at B29.00
We reiterate "BUY" FY2013 FV (DCF, 9.4% WACC) is at B29.00, with 19% upside.