Minor International: Staying on course
Related Stories
- 4Q24 core profit grew 15% y/y – in line with expectations; FY24 core profit hits another record
- Hike in hotel ADR boosted RevPar growth and expanded operating margin, alongside improving food SSSG
- Finance costs are trending down as MINT moves towards its target of reducing gearing to 0.8x
- Maintain BUY with unchanged TP of THB36.50
Earnings review
4Q24 core profit was strong, in line with expectations. MINT reported 4Q24 net profit of THB3.63bn (+269% y/y and 2,331% q/q) lifted by non-recurring gains mainly related to forex and derivative contracts. Stripping out the extra items, 4Q24F core profit came in at THB2.88bn (+15% y/y, +9% q/q) – met our estimates and market consensus. The firm core profit growth of 15% was driven by revenue growth and gross margin expansion across all businesses.
MINT post 2024 net profit of THB7.75bn (+43% y/y) with core profit of THB8.3bn (+19% y/y). The decent growth was on the back of firm hotel business following the spike in ADR across all key hubs.
Hotel performance was solid. In 4Q24, overall RevPar for owned and leased hotels grew by 4%, mainly supported by a steady growth of average daily room rate (ADR). We note that the mild RevPar growth was weighed down by the THB appreciation against EUR during the quarter. In local currency terms, EU & The Americas and Maldives recorded healthy growth.
However, under the Management Letting Rights model for Australian and New Zealand hotels, RevPar growth was down 4%. overall, hotel revenue grew 4% y/y in 4Q24.
For Thailand, RevPar growth was 14% y/y, mostly driven by 12% ADR growth y/y and increase in OR to 70% (+1ppt y/y) following further tourism recovery. For Europe & The Americas, RevPar growth was at 8% in local currency terms – supported by 5% growth in ADR and increase in OR to 70% (+2ppt y/y).
The Maldives’ RevPar turned positive 15% in 4Q24 with 10% ADR growth and 2ppt y/y occupancy rate uplift. Australia and New Zealand’s RevPar performance was down 4% due to slightly lower OR. Still, OR in Australia and New Zealand hubs remained healthy at 80% during the period.
Less negative on food SSSG. In 4Q24, food revenue delivered 4% growth y/y on the back of store expansion especially growth in Thailand hubs. Overall SSSG was slightly negative at -0.5% which was an improvement from -2.7% in 3Q24. For Thailand hub, SSSG was positive at 1.5% y/y after MINT’s strategy to boost both sales through dine-in and delivery. Together with continuous store expansion, Thailand food revenue grew 7.8% y/y.
SSSG contraction of China hubs narrowed from negative 20%-30% to -10.9% in 4Q24 after support from local stimulus measures. Australia hubs’ SSSG still showed small contraction of -1.2%.
For China, MINT has resumed its expansion in the market. Total food sales in China contracted less than its SSSG at 7.7%. However, for Australia, we still see outlet rationalisation, resulting higher food sales contraction compared to SSSG individually (-4.3% y/y).
EBIT margin widened as finance costs trended down. MINT recorded healthier EBIT margin of 17.3% (+10bps y/y, 90bps q/q) - mainly supported by better leverage of revenue growth which mostly driven by firm ADR growth. In 4Q24, MINT completed the sales of account receivables of Anantara Vacation Club which would lower down its net gearing and Debt to EBITDA ratio to 0.8x and 4.3x as targeted. Finance costs declined 6% q/q and 1% y/y on debt repayment and lower interest rate. Net-net, core profit margin improved 60bps y/y and q/q to 7.1% in 4Q24.
Outlook
Low season in 1Q25 but there is positive momentum y/y. We believe MINT’s quarterly profit should drop on a q/q basis in 1Q25 given seasonality. Nevertheless, we expect y/y performance improvement in 1Q25. On QTD basis, the RevPar in Europe and Thailand remained at the same level as in 4Q24F. We note that management had seen some cancellation in Thailand from Chinese tourists regarding the kidnapping incident relating to a Chinese movie star. But the impact is limited, and the company is seeing a resumption of bookings from Chinese tourists.
Blended food SSSG QTD saw a slight improvement from small contraction in 4Q24. Operating margin is also expected to continue to expand y/y riding with growing ADR. Finance costs should continue to trend down q/q after the debt repayment and rate cut from European Central Bank.
Recommendation
Reiterate BUY with unchanged DCF-based TP of THB36.50. We have tweaked our forecasts to reflect 2024 results. We expect overall RevPar growth to be 3% for owned and leased hotels (Europe: +3%, Thailand: +7%) after we reflect expectations of THB appreciation against EUR in FY25F. We estimate core profit growth to come in at 9% in FY25F, supported by better operating efficiency and lower interest expenses.
Our DCF-based TP of THB36.50 remains unchanged as there is no change to our estimates for FY26F and beyond. The stock is trading at an attractive EV/EBITDA of 4.8x and P/BV of 1.6x (implying -3SD of its five-year historical average). With the steady core earnings and potential share price upside of xx%, we maintain our BUY call.
Quarterly / Interim Income Statement (THBmn)
FY Dec (Btm) | 4Q23 | 3Q24 | 4Q24 | y-o-y | q-o-q | 2023 | 2024 | y-o-y |
Hotel revenue | 29,272 | 31,280 | 30,511 | 4% | -2% | 111,412 | 122,113 | 10% |
F&B revenue | 7,303 | 7,475 | 7,603 | 4% | 2% | 29,235 | 30,310 | 4% |
Others | 2,204 | 1,921 | 2,196 | 0% | 14% | 8,547 | 8,575 | 0% |
Total Revenue | 38,779 | 40,676 | 40,310 | 4% | -1% | 149,195 | 160,998 | 8% |
Hotel cost | -18,680 | -19,126 | -19,207 | 3% | 0% | -68,970 | -76,545 | 11% |
F&B cost | -2,244 | -2,327 | -2,413 | 8% | 4% | -9,180 | -9,366 | 2% |
Others | -1,173 | -1,115 | -1,213 | 3% | 9% | -4,577 | -4,793 | 5% |
Total COGS | -22,097 | -22,568 | -22,833 | 3% | 1% | -82,728 | -90,703 | 10% |
Gross Profit | 16,682 | 18,109 | 17,476 | 5% | -3% | 66,467 | 70,295 | 6% |
SG&A exp. | -10,337 | -12,106 | -12,919 | 25% | 7% | -48,317 | -50,984 | 6% |
Non-Opt. Inc./exp. | 78 | 276 | 850 | 995% | 208% | 3,757 | 2,925 | -22% |
Associates Inc. | 254 | 388 | 308 | 21% | -20% | 581 | 1,047 | 80% |
EBIT | 6,676 | 6,666 | 5,716 | -14% | -14% | 22,488 | 23,283 | 4% |
Interest Expense | -3,041 | -3,203 | -2,636 | -13% | -18% | -11,168 | -11,755 | 5% |
Extra gain/(loss) | -1,517 | -2,489 | 755 | -150% | -130% | -1,727 | -642 | -63% |
Pretax profit | 2,118 | 974 | 3,834 | 81% | 294% | 9,593 | 10,886 | 13% |
Tax | -903 | -613 | 86 | -110% | -114% | -3,505 | -2,284 | -35% |
Minority Interest | -231 | -212 | -289 | 25% | 36% | -681 | -852 | 25% |
Net Profit | 985 | 149 | 3,632 | 269% | 2331% | 5,407 | 7,750 | 43% |
Core Profit | 2,502 | 2,638 | 2,877 | 15% | 9% | 7,134 | 8,393 | 18% |
Gross Margin | 43.0% | 44.5% | 43.4% | 0.3 | (1.2) | 44.6% | 43.7% | |
SGA % Sales | 26.7% | 29.8% | 32.0% | 5.4 | 2.3 | 32.4% | 31.7% | |
EBIT Margin | 17.2% | 16.4% | 14.2% | (3.0) | (2.2) | 15.1% | 14.5% | |
EBITDA Margin | 32.6% | 29.5% | 29.5% | (3.1) | - | |||
Net Margin | 2.5% | 0.4% | 9.0% | 6.5 | 8.6 | 3.6% | 4.8% | |
Core Net Margin | 6.5% | 6.5% | 7.1% | 0.7 | 0.7 | |||
Eff. Tax Rate % | 24.8% | 17.7% | -2.8% | (27.6) | (20.5) | 31.0% | 19.8% |
Source: Company, DBSVTH
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