Analysts Rate “BUY” on MINT in Advance of Europe Lifting Covid Travel Restrictions

Analysts are positive about Minor International Public Company Limited (MINT) following the company’s guidance that earnings would improve significantly in the second half of this year, especially the hotel business, in anticipation of European countries lifting the Covid-19 travel restrictions.

 

For the first quarter ended March 31, 2021, MINT reported a net loss of 7,249 million baht, compared to a net loss of 1,773 million baht in 1Q20 where the coronavirus outbreak first began. MINT’s owned and leased hotels portfolio (including NH Hotel Group), which accounted for 52% of core hotel & mixed-use revenues in 1Q21, reported YoY organic revenue per available room (RevPar) decline of 76% in Thai Baht term.

 

On a QoQ basis, RevPar of hotels in the Maldives and Latin America showed positive development from 4Q20 but still could not fully compensate for the RevPar shortfall in other regions, especially Thailand and Europe which faced a challenging environment with the reemergence of Covid-19.

 

KGI Securities (KGI) was confident that the worst is already behind us. MINT’s hotel business is expected to see a MoM recovery throughout the end of 2Q21 backed by easing mobility in European countries, while more meaningful recovery will be seen in 3Q21   onwards. On the other hand, the company’s food business may see a temporary hiccup QoQ in 2Q21 and temporarily pull back due to the Covid-19 situation in Thailand. Overall, KGI expected earnings momentum to see a strong recovery YoY and a mild recovery QoQ in 2Q21. With a more promising path to recovery and vaccine roll outs in both Thailand and European countries, maintaining a rating of Outperform with a target price of ฿37.00.

 

KTBST Securities (KTBST) reiterated a BUY rating on MINT with a target price of ฿35.00 based on DCF, assuming WACC of  7% and terminal growth of 2.5%. Following MINT’s analyst meeting on May 18, KTBST was positive about the company’s guidance. The company has anticipated that its chain hotel in Europe will see improvement in 2H21, which is in line with KTBST forecast. 

In Europe, Spain, Italy and Germany have lifted their Covid-19 entry restrictions for European travelers since early May, and other European countries are expected to follow suits in 2H21. MINT should enjoy such policy, as revenue from the European chain hotel network generally accounts for 60% of total revenue. Additionally, the company aims to sell its assets in 2Q21, sooner than its plan in 3Q21, which should ease its cash flow situation.

KTBST maintained 2021 core loss of 17 billion baht, a narrower compared to 19 billion baht in 2020. Meanwhile, forecasting a strong improvement in 2H21 on the potential lift of Covid-19 entry restrictions in Europe in 2H21 and earnings are expected to swing to positive territory in 2022.

 

Trinity Securities anticipated a recovery from MINT in 3Q21, as 76% of hotel operations have resumed, especially hotels under the NH Hotel group, and travel across European countries is permitted. The hotel and restaurant sectors are expected to continue to grow as Chinese hubs perform well enough and Australia progressively shuts down low – performing shops, leading to higher profit margins. As a result, Trinity retained a “Trading” rating and a target price of ฿33.00 on MINT.