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Minor International

Diversified business boosts profit HOLD

Minor International Plc (MINT)

- 1Q14 profit close to projection from diversified businesses

1Q14 net profit was reported at B1,420m, growing 0.8%yoy (close to

projection); B295.4m extraordinary income from capital adjustment was

booked in 1Q13. Excluding extraordinary items, 1Q14 normalized profit rose

by 27.5%yoy. Income from operation increased by 11.8%yoy to B9,981m.

Income from hotel, spa and hotel management business (42% of total

income) grew by 14.6%yoy. Hotels in other provinces and abroad

generated strong income, compensating for weak income from hotels in

Bangkok that were affected by the political turmoil. Thus, overall RevPar

increased by 8%yoy. Income from hotel management (mainly from

Maldives) grew remarkably. Also, thanks to strong earnings results of the

hotels under MINT’s management in Maldives, share of profit doubled to

B275m. Meanwhile, income from food business (41% of total income) grew

by 11.7%yoy. 162 new branches have been opened since 1Q13), (24 more

since 4Q13), totaling 1,568 branches. In terms of financial structure, end-

1Q14 net gearing decreased to 0.74x.

- Hotel and food businesses to grow despite political turmoil

2Q14 profit is expected to grow considerably yoy. Though hotels in Bangkok

have been pressed by the political turmoil, income from hotels in other

provinces and abroad has been improving. Therefore, overall RevPar grew

by 14%yoy in April; RevPar from MINT’s own-equity hotels grew by 7%yoy.

Moreover, MINT will fully book income from own-equity Anantara Phuket

Layan; it has been partially opened in 1Q14 and would be fully opened in

2Q14. Food business is likely to rebound as well. Same store sales in April

1-20, 2014 reversed to growth from -1.8%. Owing to MINT's plans to open

new branches, profit from food business is expected to rise by 5-10%yoy.

Overall, FY2014 net profit is projected at B4.4bn, growing 7%yoy.

- Limited upside. Pressed by political unrest. Hold

FY2014 fair value (DCF, 9.4% WACC) of B26.00 implies only 9% upside.

Also, the political turmoil is not likely to end in near future. We reiterate to


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