Minor International

Minor International Plc (MINT)

Core business expansion strategy to boost profit by 15-20% p.a.
5-year business plan (2014-2018) will invest on its own equity, asset light
strategy and acquisition (purchasing assets and shareholding), aiming to boost
profit growth by 15-20% per year. For hotel business, MINT would focus on ownequity
hotels and managing under the brands ANANTARA, AVANI, OAK and Per
Aquum, to increase the number of hotels under MINT's management from 96 to
over 160 hotels within 2018. Recently, MINT has prepared the opening of 7 new
own-equity hotels and 23 hotels under MINT's management in 2014-2016.
Moreover, Anantara Estates Phuket project on 32-rai land, with 16 units of 3-8
bedrooms Pool Villa (700-1,800 sq.m, with the value of B240-300m or US$8-
10m per unit), would be launched in late-1Q14, and its income would be booked
in 2H14 (not included in the forecast). For food business, profit is projected to
grow by 12-15%p.a; 3-4% from same store sales, and 8-10% from branch
expansion on its own equity and franchises, both in Thailand and oversea,
aiming to grow to over 2,600 branches within 2018. MINT has investment
budget of B20-25bn for next 5 years and additional B10-12bn for new business,
which mostly comes from internal cash flow and loan.
- Hotel, property and food businesses to continuously boost 4Q13 profit
We maintain our forecast. 4Q13 profit is likely to grow outstandingly. Though
hotel business would be pressed by political rallies, there has been no violence
and the rallies have taken place in the given area. Also, MINT’s hotel rooms in
Bangkok make up only 17% of total rooms under MINT’s management, and
revenue from MINT’s hotels in Bangkok makes up only 15% of income in hotelrelated
business (including spa and property) and less than 10% of MINT’s total
income. Thus, there would be no significant effect on MINT’s hotel business.
Moreover, there would be revenue from two hotels that will be reopened in 4Q13
after the maintenance shutdown: Anantara Veli Maldives (reopened since
September), of which the room rate has increased by 15-20%, and Anantara
Bophut Resort (reopen in December 2013), of which the room rate might
increase by 5-7%. For property business, B120-150m income from the sale of a
villa at Samui would be booked, and B500-600m income from transferring St.
Regis Condominium (7% to be transferred) would be recognized, as well as at
least B400m income from Timeshare project. For food business, late-year
spending season and sales promotion would boost same store sales, as reflected
from Pizza Company’s October same store sales that grew by at least 10%.
Moreover, MINT has been actively expanding new branches, likely to boost
overall revenue growth by at least 10%yoy. We maintain FY2013 net profit
forecast at B4bn, growing 18%yoy.
- “BUY”. FY2014 fair value is B34
We derive FY2014 fair value (DCF, 9.4% WACC) at B34, implying 31% upside.
We reiterate "BUY".