Minor International
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1Q15 profit to grow from every business BUY
Minor International Plc (MINT)
- 1Q15 normalized profit to rise 13% yoy
1Q15 normalized profit is projected at B1.6bn, rising 13%yoy. The hotel business, especially in Bangkok, has rebounded significantly, boosting RevPar of own-equity hotels by 8%yoy. Also, additional rooms from eight newly-acquired hotels under Sun and Tivoli groups are expected to raise income from the hotel business by 10%yoy. However, profit from hotels in Maldives would not be as strong as in 1Q14, so income from hotel management is expected to fall 26%yoy to B390m and share of profit (mainly from hotels in Maldives) would drop by 27%yoy to B200m. Income from the property business is projected to rise by 23% to B750m, at least B120m from transfer of one unit of St. Regis condominium and the rest from Time Share. For the food business, despite same store sales growth of only 0.6%, 159 new branches have been opened, totaling 1,727 branches, projected to boost income from restaurants by 13%yoy. Operating income is estimated at B10,642m, rising 7%yoy. EBITDA Margin is expected to improve from 23% in 1Q14 to 25.8% in 1Q15. MINT may recognize extraordinary profit from appraisal of asset from the acquisition of Sun group hotel, which has not been clear yet; including this item, MINT's 1Q15 net profit may surpass B1.6bn.
- Good growth from every business
MINT's profit is anticipated to grow further from every business. The hotel business in Thailand is expected to rebound owing to reviving tourism and additional income from newly-acquired overseas hotels. For the property business, MINT would start booking income from Anantara Estates Phuket, given that at least three units (US$10m each) are sold. Income from the food business is projected to grow by at least 10%yoy, 8-10% from opening of new branches. We maintain FY2015 earnings forecast, expecting MINT's normalized profit to grow by 27%yoy to B5.5bn.
- BUY. FY2015 fair value is B39.00
We reiterate BUY. FY2015 fair value (DCF, 9% WACC) is B39.00, implying 18% upside.
