Minor International

Promising outlook for every business

Minor International Plc (MINT)

Profit growth targeted at 15-20% a year from hotel,residential & food businesses

As for an investment strategy in the next 5 years (2013-2017), MINT has

targeted average profit growth at 15-20% a year from an expansion of core

businesses through an organic investment and asset light strategies as well as

business acquisition, particularly in Asian countries, to increase a portion of

overseas profit to 50% (from 21% in 2012). For the hotel business, the company

will both open new hotels with its own equity and manage new hotels under

brands ANANTARA, AVANI, and OAKS in order to increase the number of hotels

under its management from 82 to more than 140 by 2017. Recently, the

company has prepared to open 10 news hotels with its own equity and manage

20 new hotels in the next 3 years. Moreover, it also has a plan to develop

additional residential projects near Anantara Riverside BKK, Anantara Phuket,

and a land bank in Khao Lak. For the food business, the company will open new

restaurants on its own equity and franchises to increase the number of outlets

from 1,381 at the end of 2012 to more than 2,700 by 2017. With the

abovementioned business expansion projects, the company has set a budget of

B22-25bn for the next 5 years, or around B4-5bn a year, and additional B4-5bn

a year for new businesses; sources of capital will be internal cash flow, warrant

conversion, and loans.

Q1 2013 might be the peak of the year. 18%yoy profit growth foreseen in 2013

We maintain our profit forecast, projecting earnings in 1Q13 to grow

continuously with a chance to hit a year high, thanking to the high margin

business - hotel, which has benefited from a peak season of Thailand's tourism.

Average occupancy rate of every hotel in January 2013 stood at 71% and is

projected to escalate in February as a result of the Chinese New Year. Moreover,

the company will begin to recognize some revenue from 2 new hotels in Vietnam

(158 rooms) after the acquisition in early February. For the property

development business, the company will book revenue from Timeshare business

at no less than B300m and a transfer of 7% area of St. Regis condominium at

B350m. The food business will also be prosperous with new restaurant openings

and full-quarter recognition of revenue from Riverside restaurant after a 49%

business acquisition since late December 2012. For overall 2013, we project the

net profit at B4bn, growing 18%yoy.

BUY. Upside is 14%. 2012's dividend is B0.30/share

We reiterate our recommend to buy MINT. 2013's fair value, DCF (WACC of

9.4%), is B29/share, implying 14% upside. 2012's dividend payment is

announced at B0.30/share; XD date is on 11 April and the payment date is on 30

April 2013.