Minor International

Profit grows as expected in 3Q14. To peak in 4Q14 BUY

Minor International Plc (MINT)

- 3Q14 profit grows 5.6%yoy as expected

3Q14 net profit was reported at B746m, growing 5.6%yoy. MINT generated

B8,638m operation income, rising 2%yoy. Income from hotel business

(36% of total income) grew by 4.9%yoy mainly from overseas hotels, while

hotel business in Thailand has not fully recovered after the political turmoil.

Also, share of profit from associates rose by 92%yoy to B262m. Income

from property business (8% of total income) fell by 32%yoy to B706m as

there was no transfer of St. Regis condominium. Income from food business

(44% of total income) grew by 10.5%yoy because same store sales rose by

1.2% and 184 new branches were opened in 3Q14, making the total

branches of 1,648. Overall, EBITDA margin increased to 18.5% in 3Q14,

and net gearing was 0.95x.

- 4Q14 profit to prosper from every business

Hotel business would rebound in 4Q14 because the political situation has

become more stable and the business has entered high season; occupancy

rate stood at 70% (versus 66% average occupancy rate in 3Q14) and

REVPAR rose by 5%yoy in October. For property business, income from

time share would increase in high season, and at least B120m income from

transfer of one unit of St. Regis condominium would be booked. Also,

income from food business is projected to grow by at least 10%yoy because

same store sales would grow in spending season at the end of year and

more branches would be opened. Overall, 4Q14 net profit is estimated to

make the year's peak at B1.6bn. We project FY2014 normalized profit at

B4.4bn, growing 15.7%yoy.

- BUY. 18.5% upside

We switch to use FY2015 fair value (DCF, 9% WACC) of B40, implying

18.5% upside. We reiterate BUY.