Minor International
3Q13 net profit to grow 12.8%yoy. To grow more rapidly in 4Q13 BUY
Minor International Plc (MINT)
- 3Q13 net profit projected at B660m, to grow 12.8%yoy
3Q13 net profit is projected at B660.3m, growing 12.8%. Normalized
income is expected at B8.246bn, rising 10.6%yoy. Income from hotel
business (34% of total income) is likely to grow by 5%yoy, as own-equity
hotels’ occupancy rate would rise from 64% in 2Q12 to 66%, and room rate
would grow by 2%yoy. Moreover, income from the two new hotels in
Vietnam acquired in 1Q13 would be recognized, compensating for
maintenance shutdown of two hotels in April-November 2013 and 8%yoy
decrease in Oaks' REVPAR. For property business, B750m income from
transferring St. Regis Condominium and B350m from Timeshare project
would be recognized. For food business (41% of total income), though
domestic consumption decelerated, lowering same store sales, it would be
compensated by expansion of new 160 branches since 3Q12 (45 new
branches since 2Q13), making 1,464 total branches, partially from
acquisition of Riverside, China, since late-2012. Thus, total system sales is
projected to grow by 13%yoy. Gross margin is projected to increase to
58%, and net profit margin would be 8%.
- Good growth in 4Q13 due to tourism season
4Q13 profit is likely to grow in all businesses, especially hotel business that
would benefit from tourism season. Occupancy rate is projected to exceed
70%. Moreover, an own-equity hotel, Anantara Phuket, will be opened, and
two hotels under maintenance will be reopened in November-December
2013. For property business, at least B400m from Timeshare project and
B700-800m income from transferring St. Regis Condominium would be
recognized (8% to be transferred). For food business, late-year spending
season and sales promotion would boost sales volume. We maintain FY2013
net profit forecast at B4bn, growing 18%yoy.
- Positive sentiment from tourism season. Share price to outperform
Positive sentiment from tourism would boost the share price, so it may
outperform. We recommend "BUY" when price weakens. FY2013 fair value
(DCF, 9.4% WACC) is B29.00.
