Minor International

Minor International Plc (MINT) 

- 4Q14 profit to make year's peak  

 

MINT's 4Q14 profit is expected to make the year's peak at B1.68bn, growing 8.5%yoy. The hotel business in Thailand has revived after the political tension receded, and the overseas hotel business (both own-equity and under management business) has been strong, thus boosting overall income from the hotel business by 8%yoy and raising profit sharing from associates by 40%yoy to B260m. Income from the property business is expected to drop by 24%yoy because there is no sale of Residence in Samui like in 4Q13. Income from the food business is projected to grow by 16.5%yoy; despite same store sales growth of only 0.4%, 164 new branches have been opened, totaling 1,708 branches. Normalized income is estimated at B10bn, growing 8%yoy, and EBITDA margin is projected to improve from 26.6% in 4Q13 to 26.8% in 4Q14.  

 

- Strong profit expected in 2015    

 

Every business is expected to improve in 2015. The hotel business is projected to rebound and fully generate income because Thai tourism has revived and three new own-equity hotels would be opened, boosting occupancy rate of own-equity hotels by 10%yoy to 70% and raising RevPar by 5%yoy. For the property business, MINT would recognize income from at least three units of Anantara Estates Phuket (US$10-15m for each unit), and income from Time Share is expected to rise by at least 10%yoy. Income from the food business is projected to grow by at least 10%yoy; same store sales would grow by 2-3% (versus 0.4% in 2014) and income from new restaurant would increase by 8-10%/year. Overall, FY2015 net profit is estimated to grow by 18.6%yoy to B5.22bn. 

 

- BUY. FY2015 fair value is B40   

 

FY2015 fair value (DCF, 9% WACC) is B40, implying 14% upside. We reiterate BUY. MINT's earnings and fair value might not meet our projection if any bad event damages the tourism and hotel businesses. Also,purchasing power has not recovered fully, affecting the food business.