Minor International

Diversified business BUY

Minor International Plc (MINT)

- Invest on every business for long-term growth

MINT maintains its business goal for the next five years (2014-2019),

aiming for profit growth of 15-20% a year. For hotel business, MINT aims to

increase the number of hotels under MINT's management (own-equity

hotels, hotels under management business, and acquired hotels) from 119

to 190 hotels with total 19,000 rooms within 2019. For property business,

MINT plans to launch Anantara Estates Phuket valued at least B4.5bn within

4Q14 (comprising 15 units of villas, US$10-15m each) and start recognizing

income in 2H15. Also, MINT has formed a 50-50 joint venture with N-Park

on 44-unit Anantara Chiang Mai (comprising 1-3 bedrooms) valued below

B1bn which would be completed in 2016 (not included in our earnings

forecast yet). For food business, MINT aims to open new branches (ownequity

and franchises) by 8-10% of its existing branches, increasing the

number of its branches from 1,648 at present to 3,000 within 2019.

- Profit to make year's peak in 4Q14

MINT's 4Q14 net profit is projected to make the year's peak from every

business. Hotel business would rebound 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 6%yoy from October 1 to November 15. 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 15%yoy (20%yoy growth in October) because same store sales

would grow in spending season at the end of year and more branches would

be opened. Overall, we maintain our earnings forecast, projecting FY2014

normalized profit at B4.4bn, growing 15.7%yoy.

- BUY. 19.4% upside

FY2015 fair value (DCF, 9% WACC) is B40, implying 19.4% upside. We

reiterate BUY.