Minor International
Target price: Bt16.20 Strong recovery in FY12 Targeting at least 20% growth p.a., fueled by organic growth and M&A Flat Q4 2011F profit with Bt200m asset write-off due to flood, but core profit will surge 49% to Bt647m FY12F core profit will grow 21%,
Minor International Plc (MINOR)
Strong interest from investors. MINT met with over 30 investors at the DBSV Pulse of Asia Conference in Singapore. Management reaffirmed robust growth in FY12F would be fueled by (i) real estate sales, including St. Regis residence and Anantara Vacation club timeshare, which command high yields, (ii) full year consolidation of Oaks, iii) recovery of hotel business in Thailand post-floods, (iv) strong food business, and (v) higher associate income from larger stake in S&P restaurants, and growth from The Coffee Club and Ribs and Rubs steakhouse.
Strong 4Q11F core profit. MINT should turn in Bt446m net profit in 4Q11 (flat YoY) because of a Bt200m asset write-off charge (should be reversed when it receives insurance claim in 1H12F). Excluding this, core profit should surge 49% thanks to (i) sales of St. Regis residence (10% of saleable area) and AVC (c.USD9m), strong food business (6.5% SSSG, 12.7% TSSG, and 9% more new outlets), and contribution from Oaks which should offset weaker Thai hotel operations (due to floods). 4Q11F occupancy rate is estimated at 56%, but ADR should rise 6% YoY to Bt6,611, led by Maldives and Sri Lanka hotels.
Reiterate BUY and Bt16.20 DCF-based TP (9.8% WACC; 2% terminal growth rate). MINT is trading at attractive 14x FY12F PE, below its 7-year historical mean and implying attractive 0.7x PEG (core).
