Minor International

Minor International Plc (MINT)

Beat all estimates
MINT posted a record core profit of Bt1.56bn for 4Q13, up by 34% YoY and 120% QoQ. The result was 10% above our estimate and 7% ahead of the consensus, due to fatter-than-expected margins. MINT proved the resilience of its operation, despite the political chaos in Nov-Dec The firm announced a DPS of Bt0.35 for FY13, a 1.5% yield (XD on April 16; payment on April 30).
Results highlights
The record profit was driven by all key businesses—Hotel, Food and Residential. Core revenue increased by 15% YoY and 17% QoQ to a new high of Bt9.8bn, while NM fattened by 2.3% YoY and 7.5% QoQ to 16.0% in 4Q13. The net gearing ratio was stable at 0.79x at YE13.
Despite the economic slowdown, MINT delivered YoY Food TSSG of 14.3% and SSSG of 0.9% (outperforming peers). The firm reported Food GM of 67.4%, up 40 bps YoY.
Hotel revenue rose by 7% YoY and 21% QoQ to Bt3.5bn. RevPar increased 7% YoY; the mean occupancy rate was 71% (flat YoY); the room rate rose 6% YoY. Proprietary hotel RevPar increased 10% YoY. Oaks’ RevPar was flat in baht terms (but up 7% in Australian dollars).  
Residential sales were strong at Bt1.1bn in 4Q13 (60% from timeshare sales and 40% from St.Regis and The Estate Samui), up by 52% YoY and 4% QoQ.  Residential GM was very high at 71.6%.
Outlook
1Q14 profit is expected to be flat YoY and QoQ. Ex-Bangkok hotel performances should offset the effect of weak Bangkok hotel numbers. For Jan to mid-Feb 2014, system-wide RevPar rose 7% YoY, Oaks resumed baht-denominated YoY RevPar growth, due to no FX loss. Food SSSG was 0.9% YoY in Jan 2014.
What’s changed? 
We maintain our FY14 core profit forecast at Bt4.5bn (up 10% YoY), despite the political chaos. Among our Tourism coverage, MINT entails the least downside risk to earnings because it has the most diverse revenue streams (Bangkok hotels comprise only 7% of total revenue). Note that we have yet to factor the new residential project, Anantara Estates, Phuket, into our model.
Recommendation
MINT is the best Tourism &Leisure play for the prevailing environment. The firm will post profits during 2Q-3Q14 low season, while the other hotel operators may run losses. Our BUY rating stands with a YE14 target price of Bt29 (a 20% discount to DCF value).  MINT trades at an FY14 PER of 20.3x, near its FY06-13 mean (CENTEL trades at 1SD above its mean).