Minor International

Minor International Plc (MINT)

- To buy six hotels valued B6.56bn in Brazil and Portugal     

MINT announced to acquire six hotels totaling 1,685 room (11.5% of total 14,659 rooms under MINT's management at the end of 2014) valued B6,560m (EUR168.2m), two in Brazil and four in Portugal. MINT probably acquires the hotels through loan from financial institutions (end-3Q14 net gearing was 0.95x). In addition to the aforementioned six hotels, the company also manages Tivoli and Tivoli Collection, luxury hotel chains under the brand Tivoli Hotels & Resorts comprising 14 hotels (two in Brazil and 12 in Portugal) with over 2,900 rooms.  

- To boost profit within 2015. Revise up profit forecast by 6%    

The aforementioned acquisition is in line with MINT's plan to expand its business overseas. MINT has already expanded its business throughout Asia, Australia, the Middle East, and Africa. The owner rights on Tivoli Hotels & Resorts brand in Brazil would help MINT expand its brand as well as other business in South America, and the acquisition of the four hotels in Portugal is also a good start for MINT's future brand expansion in Europe. Benefit from the hotels will be included in our forecast from February 2015 on. Overall, MINT's FY2015 revenue is revised up by 4%. Its normalized profit is expected to rise 6% from the initial forecast to B5.5bn in 2015, growing 25%yoy from B4.4bn in 2014. 

- New FY2015 fair value is B43, implying 25% upside     

Under the new forecast, FY2015 fair value (DCF, 9% WACC) is revised up from B40 to B43, implying 25% upside. We reiterate BUY for 4Q14 earnings 

are projected to make the peak of 2014.