Minor International Eyes 20% Profit Growth in 2024-26 with Asset-Light Strategy to Drive Margin

Minor International Public Company Limited (SET: MINT) recently set a new milestone for the company after reporting a record high of core net profit in 2023 at THB 7,132 million, up three fold from 2022. The ambitious goal for MINT does not stop there as the company plans to expand the food and hotel portfolio with its three-year investment plan.

Mr. Dillip Rajakarier, MINT’s Group CEO, said in a press conference that with robust growth in 2023, the company saw that the trend continued into the first quarter of 2024 as booking in January and February showed strong demand from tourists despite being a low season in Europe, while Thailand saw 40% YoY increase in booking for its peak season in 4Q and 1Q.

MINT plans to drive ADR during its peak season with hotel repositioning, which includes rebranding, upgrading and renovation to allow the company to command higher prices. On the other hand, it will shift to focus occupancy rates during the low season, while also continuing expanding its food business in other countries.

Despite market uncertainties and high interest rates, MINT set higher and more aggressive CAPEX for the year at 10-13 billion baht, in which around 70% will go into the hotel business and 30% into the F&B segment, seeing that the world has overcome Covid pandemic that urges people to be cautious over their savings. Considering higher Return on Invested Capital (ROIC) from robust tourism and spending, the company expected it to offset other downside such as volatility in the economy, inflation and higher costs from interest rates or labour costs, while also aiming to lower net gearing (Net Debt to Equity) from 1.0x at end-23 to 0.8x at end-24.

One of the key focuses for the company is to expand its asset-light business, a hotel management business, to account for 40% of its hotel operations within the next three years from the current ratio of 20% as the hotel management business tends to have higher margin than operating its own hotels.

The plan of expanding 200-250 hotels in the next three years to reach 780 hotels and 1,000 restaurants to reach 3,700 worldwide is already going into motion. The company stated that the deal has been signed for 80 hotels in the pipeline, while there are 40-50 hotels that are currently in a discussion. The F&B segment will also expand into China, India, Vietnam, Singapore, Indonesia and the Middle East.

Along with its three-year plan and 30 billion baht in CAPEX, the company expected to see 8-10% revenue growth over the period, while net profit should record a 15-20% CAGR growth.

MINT had no concerns about economic slowdown nor lower pre-pandemic tourist arrivals as it strongly believed that tourism is coming back, underlying more spending as shown in 2023, which would give a huge boost to its hotel and food businesses.