The share price of Minor International Public Company Limited (SET: MINT) rose as much as 6.12% to trade at THB26.00 per share on Tuesday after recording five days of losing streak for a total of 12.24%.
KGI Securities stated that it expected MINT to report a 3Q22F normalized profit of Bt1bn, reversing from a normalized loss of Bt2.4bn in 3Q21, but softening 17% QoQ. The strong growth YoY would be backed by continued improvement in tourism sentiment across destinations. The drop in QoQ would be due to seasonal effects for its hotel operations in Europe. Overall, KGI expected total revenue in 3Q22F to jump 54% YoY but soften 5% QoQ to Bt30bn, while the overall EBIT margin is expected to remain positive at 13.1% (+16.5ppts YoY, -1.1ppts QoQ).
RevPar in 3Q22F is expected to come in at Bt3,017 (+70% YoY, -6% QoQ), resulting from: i) occupancy rate remaining high at 66% (+19ppts YoY, flat QoQ), and ii) ARR growing 20% YoY but declining 6% QoQ. Hotels in Europe entered the slower season in 3Q22 resulting in a drop in ARR, while the overall performance for non-Europe hotels (e.g. Thailand) is expected to show a strong recovery YoY amid continued improvement in the COVID-19 situation.
Same-store-sales growth (SSSG) is expected to accelerate to 22% YoY backed by its Thailand hub achieving SSSG of 30% YoY amid low base last year. Meanwhile, restaurants in China are expected to see improving performances given the decrease in new infections and loosening of COVID-19 restrictions since June 2022.
In addition, KGI revised down its net profit projections by 66% for 2022 and 11% for 2023 to factor in higher interest expense and lower EBIT margin due to rising utility costs.
With the negatives partially priced-in, KGI maintained a rating of Outperform on MINT. However, the firm believed ongoing uncertainties from geopolitical tensions, economic risks, and higher energy costs rippling through Europe in 2023 may continue to overhang the share price. KGI’s new target price is Bt33.50, from Bt38.50, based on 14.5x 2023F EV/EBITDA or 60.75SD to its long-term mean (de-rating from previously at 60.25SD).
