MINT Shows Confidence in European Hotel Operations to Outperform without Impact from Energy Bills

Minor International is confident in the company’s hotel operations this year based on rising occupancy rate and growing positive outlook on the revival of tourism in Europe, according to the CFO of a Thai multi-national company.

 

Mr. Chaiyapat Paitoon, Chief Financial Officer (CFO) of Minor International Public Company Limited (SET: MINT), told “Kaohoon” in an interview on Thursday to reiterate his outlook on the company and eased investors concerns on rising energy bills in Europe that sent its share price to plummet in the morning session.

The downgrade from Credit Suisse in MINT triggered a selloff as the research raised concerns on rising energy bills in Europe that could potentially hamper earnings of NH Hotel Group SA, a Spanish multinational hotel company owned by MINT.

Mr. Chaiyapat said that MINT has an efficient cost control on energy bills as the company had negotiated with suppliers to lock in on a long-term purchasing price. Meanwhile, energy costs only account for 3-4% of its total expenses.

The CFO pointed out that the company had increased its room rate since last year, which could offset energy costs, while the refurbishment during the Covid-19 pandemic up until now allowed rooms to drive the rate even higher.

As hotel operations in Europe continued to recover as Covid subsided and authorities eased restrictions, MINT said that the company sees an accelerating number in business travel, events, seminars, and long-haul travellers, resulting in an increase of stays in MINT’s hotel chains.

The occupancy rate is currently above 70% as of July 2022 with an ADR at EUR140.

Mr. Chaiyapat reaffirmed investors’ confidence, saying the company proved its strong performance in the second quarter this year with a turnaround from recording loss to book THB1,561 million in net profit, pointing out that ADR and RevPar in 2Q22 were already above pre-Covid level by 20% and 10%, respectively.

The CFO added that the operations in the third and fourth quarter of this year will continue to grow into 2023 with over THB 26,000 million cash flow and strong liquidity.

 

Earlier today, FSS International Investment Advisory (FSSIA) wrote that the impact of utilities cost for MINT may not be as bad as market fears, stating that NH Hotels has locked in contracted power prices and rising ADR should offset energy costs in case of a significant increase in gas price from the current level.

FSSIA estimated MINT’s core profit forecast in 3Q22 to increase 159% YoY and 16% QoQ at THB 1,398 million and recommended ‘BUY’ MINT with a target price at THB43.00 per share.