Earnings Preview

16 January 2018

Food & Beverage

Minor International

MINT Current

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Close

2018 TP

Exp Return

THAI CAC

CG 2017

BUY

BUY

44.25

48.00

+ 8.5%

Certified

5

Consolidated earnings BT (mn)

2015

2016

2017E

2018E

Normalized earnings

4,704

4,576

5,379

6,500

Net profit

7,040

6,590

5,379

6,500

1.07

1.04

1.16

1.40

Normalized EPS (Bt) % growth Y-Y

-1.3

-2.9

11.7

20.8

EPS (Bt)

1.60

1.49

1.16

1.40

% growth Y-Y

45.4

-6.6

-22.4

20.8

EPS (Bt) – full dilution

1.60

1.49

1.16

1.40

% growth Y-Y

0.5

-0.1

-0.2

0.2

Dividend (Bt)

0.35

0.37

0.41

0.49

BV/share (Bt)

7.5

8.5

10.7

11.7

EV/EBITDA (x)

21.1

19.4

21.2

17.4

Normalized PER (x)

41.4

42.6

38.2

31.6

PER (x)

27.7

29.6

38.2

31.6

PBV (x)

5.9

5.2

4.1

3.8

Dividend yield (%)

0.8

0.8

0.9

1.1

ROE (%) YE No. of shares (million)

15.5

13.0

12.4

12.5

4,402.3

4,410.4

4,641.8

4,641.8

1.0

1.0

1.0

1.0

Par (Bt)

Source: Company data, FSS estimates

Share data Close (15/01/2018)

44.25

SET Index

1,822.66

Foreign limit/actual (%)

49.00/36.21

Paid up shares (million)

4,618.91

Free float (%) Market cap (Bt m)

58.20 204,386.96

Avg daily T/O (Bt m) (2018 YTD) hi, lo, avg (Bt) (2018 YTD)

979.80 44.50, 41.25, 42.65

Source: Setsmarts

SET Index

Price (Bt)

2,050.00

59.00

1,900.00

53.00

1,750.00

47.00

1,600.00

41.00

1,450.00

35.00

1,300.00

29.00

1,150.00

23.00

1,000.00

SET

850.00

MINT

11.00 5.00

Jan-12 Feb-12 Apr-12 Jun-12 Jul-12 Sep-12 Nov-12 Jan-13 Feb-13 Apr-13 Jun-13 Jul-13 Sep-13 Nov-13 Jan-14 Feb-14 Apr-14 Jun-14 Jul-14 Sep-14 Nov-14 Jan-15 Feb-15 Apr-15 Jun-15 Aug-15 Sep-15 Nov-15 Jan-16 Feb-16 Apr-16 Jun-16 Aug-16 Sep-16 Nov-16 Jan-17 Feb-17 Apr-17 Jun-17 Aug-17 Sep-17 Nov-17 Jan-18

700.00

17.00

Source: SET

Analyst: Veeravat Virochpoka Register No.: 047077 Tel.: +662 646 9821 email: [email protected] www.fnsyrus.com

4Q17 profit set to remain strong thanks to high season Our forecast calls for MINT’s 4Q17 normalized earnings to jump 37.9% Q-Q and 16.9% Y-Y thanks to the tourism industry’s high season in Thailand. Given that, we expect 2017 normalized earnings to surge 17.5% Y-Y. In 2018, growth remains bright thanks to the upward Thai tourism industry outlook. What’s more, the company’s food business benefits from the economic recovery and a rise in consumption. As a result, we maintain our forecast which calls for 2018 normalized earnings to continue to soar by 20.8% Y-Y to a new high. Similarly, we stand by our 2018 TP at Bt48. Finally, we retain our BUY rating on MINT and continue to keep it as our top pick in the tourism sector. Expect 4Q17 profit to continue to grow strong Our forecast calls for MINT’s 4Q17 normalized earnings to amount to Bt1.6bn (+37.9% Q-Q, +16.9% Y-Y). Such sharp gains should be made possible by the tourism industry’s high season in Thailand and the low base in 4Q16 when the country mourned. In the October – December quarter, we expect the company’s hotel unit to continue to serve as a growth driver. In particular, we anticipate that Rev Par of the hotels that it owns jumped by over 10% Y-Y. Moreover, we predict that its food business began to recover in line with purchasing power. In this regard, we expect negative samestore-sales growth (SSSG) to decrease to 1% Y-Y, while EBITDA margin is anticipated to widen to 23.3% (vs. 20.6% in 3Q17 and 21.6% in 4Q16) thanks to operating leverage, particularly of its hotel unit after room rate was up. Given that, we expect 2017 normalized earnings at Bt5.4bn (+17.5% Y-Y). Profit set to remain strong and continue to hit new high in 2018 In 1Q18, MINT’s operating performance continues to see strong momentum thanks to the tourism industry’s peak season in Thailand. Moreover, the Thai tourism industry outlook remains upward in 2018 thanks particularly to the government’s stimulus. In this regard, we initially expect the number of tourists to grow by about 5% Y-Y to 36.5mn. Meanwhile, we anticipate the economy and the recovery in domestic consumption to support its food business to turn to grow and record positive SSSG. Given that, we stand by our forecast which calls for 2018 normalized earnings to continue to jump by 20.8% Y-Y to a new high of Bt6.5bn. What’s more, we predict additional upside from its M&A strategy after the company has secured over Bt7bn in capital from the conversion of MINT-W5 late last year. Maintain BUY rating We stand by our 2018 DCF-based TP at Bt48 (WACC 7.78%, Terminal Growth 3%). Currently, MINT’s hotel business is in its high season. This will support 4Q17-1Q18 profit to grow strong both Q-Q and Y-Y. In 2018, the company’s profit will continue to hit a new high thanks to growth in all businesses. Given that, we retain our BUY rating on MINT and continue to keep it as our top pick in the tourism sector. Risks : Natural disasters, terrorist attacks, fierce competition in certain markets, and a slowdown in purchasing power

Page 1 of 5

MINT 4Q17E Earnings Preview (Bt mn)

4Q17E

3Q17

%Q-Q

Revenue

13,691

13,721

-0.2

12,903

4Q16

%Y-Y 6.1

Cos of services

5,592

5,601

-0.1

5,627

-0.6

Gross profit

8,098

8,121

-0.3

7,276

11.3

SG&A

6,709

6,804

-1.4

6,631

1.2

Normalized earnings

1,576

1,143

37.9

1,347

16.9

Net profit

1,576

1,143

37.9

1,293

21.8

Gross margin (%)

59.2

59.2

0.0

56.4

2.8

Norm earnings margin (%)

11.5

8.3

3.2

10.4

1.1

Net profit margin (%)

11.5

8.3

3.2

10.0

1.5

Source: FSS estimates

Page 2 of 5

MINT Income Statement (Consolidated)

Cash Flow Statement (Consolidated)

(Bt mn)

2014

2015

2016

2017E

2018E

(Bt mn)

2014

2015

2016

2017E

2018E

Revenue

36,989

42,432

51,152

54,580

62,248

Net profit

4,402

7,040

6,590

5,379

6,500

Cost of sales

13,740

16,118

19,632

19,917

22,502

Deprec. & amortization

2,860

3,095

3,850

4,101

5,656

Gross profit

23,249

26,314

31,519

34,662

39,746

Change in working capital

-4,871

2

6,476

-1,278

-232

SG&A

17,144

20,090

24,044

25,486

28,440

Other adjustments

0

0

0

0

0

Operating profit

6,105

6,224

7,476

9,176

11,306

Cash flow from operations

2,390

10,136

16,915

8,202

11,923

Other income

2,798

5,717

5,821

3,122

3,438

Capital expenditure

-5,851

-12,314

-17,829

-7,897

-5,500

EBIT

6,044

8,846

9,447

8,197

9,087

Others

-3,982

-10,230

-545

0

0

EBITDA

8,903

11,941

13,297

12,298

14,743

Cash flow from investing

-9,833

-22,544

-18,373

-7,897

-5,500

Interest charge

1,145

1,301

1,606

1,726

1,395

Free cash flow

-7,443

-12,408

-1,458

306

6,423

Tax on income

397

411

1,032

882

917

Net borrowings

10,697

11,392

4,358

-7,321

-4,198

4,502

7,134

6,809

5,589

6,776

100

94

219

210

276

Normalized earnings

4,333

4,704

4,576

5,379

6,500

Extraordinary items

69

2,336

2,014

0

0

4,402

7,040

6,590

5,379

6,500

Earnings after tax Minority interest

Net profit

Balance Sheet (Consolidated)

Equity capital raised Dividends paid Others

1

422

293

8,415

0

-1,414

-1,445

-1,540

-1,647

-1,883

161

669

-1,257

210

276

Cash flow from financing

9,445

11,038

1,854

-343

-5,804

Net change in cash

2,002

-1,370

396

-37

619

2014

2015

2016

2017E

2018E

Important Ratios (Consolidated)

(Bt mn)

2014

2015

2016

2017E

2018E

Cash

5,372

4,003

4,399

4,361

4,981

Growth (%)

Current investment

0

0

0

0

0

Revenue

6.7

14.7

20.5

6.7

14.0

Accounts receivable

3,326

4,960

5,059

5,398

6,156

EBITDA

6.6

34.1

11.4

-7.5

19.9

Inventory

1,942

2,389

2,763

2,748

3,102

Net profit

7.3

59.9

-6.4

-18.4

20.8

Other current asset

2,367

8,472

3,796

3,796

3,796

Normalized earnings

13.7

8.6

-2.7

17.5

20.8

Total current assets

13,006

19,823

16,016

16,303

18,035

Investment

Profitability (%)

6,820

8,949

9,386

9,386

9,386

Gross profit margin

62.9

62.0

61.6

63.5

63.9

26,423

35,643

49,622

53,417

53,262

EBITDA margin

24.1

28.1

26.0

22.5

23.7

33,966

33,429

33,429

33,429

EBIT margin

16.3

20.8

18.5

15.0

14.6

74,279

98,382

108,453

112,535

114,112

Normalized profit margin

11.7

11.1

8.9

9.9

10.4

Short-term loans

2,333

2,588

1,124

1,500

1,500

Net profit margin

11.9

16.6

12.9

9.9

10.4

Account payable

5,589

7,753

7,575

6,694

7,558

Normalized ROA

6.4

5.4

4.4

4.9

5.7

Current maturities

4,287

1,513

6,698

6,698

6,698

Normalize ROE

16.3

15.5

13.0

12.4

12.5

Normalized ROCE

10.0

10.4

10.4

8.6

9.5

PPE Other assets Total Assets

28,029

Other current liabilities

1,363

1,727

2,613

2,540

2,557

Total current liabilities

13,573

13,580

18,009

17,432

18,312

Risk (x)

Long-term debt

27,461

41,373

42,010

34,313

30,115

D/E

1.5

1.7

1.7

1.1

1.0

3,221

6,718

7,637

7,637

7,637

Net D/E

1.3

1.6

1.6

1.0

0.9

Total non-cu

30,682

48,091

49,647

41,950

37,752

Net debt/EBITDA

4.4

4.8

4.8

4.5

3.5

Total liabilities

44,255

61,670

67,656

59,382

56,064

Per share data (Bt)

Registered capital

4,202

4,642

4,642

4,642

4,642

Reported EPS

1.10

1.60

1.49

1.16

1.40

Paid-up capital

4,002

4,402

4,410

4,642

4,642

EPS - Full Dilution

1.10

1.60

1.49

1.16

1.40

Share Premium

7,333

7,355

7,640

15,824

15,824

Normalized EPS

1.08

1.07

1.04

1.16

1.40

420

464

464

464

464

EBITDA

2.22

2.71

3.01

2.65

3.18

16,545

22,141

27,191

30,922

35,539

Book value

7.01

7.45

8.48

10.67

11.67

Dividend

0.35

0.35

0.37

0.41

0.49

1.0

1.0

1.0

1.0

1.0

P/E

40.2

27.7

29.6

38.2

31.6

Norm P/E

40.9

41.4

42.6

38.2

31.6

6.3

5.9

5.2

4.1

3.8

24.3

21.1

19.4

21.2

17.4

0.8

0.8

0.8

0.9

1.1

Other LT liabilities

Legal reserve Retained earnings Others Minority Interest Shareholders' equity

-243

-1,559

-2,303

-2,303

-2,303

1,968

3,909

3,395

3,605

3,882

30,024

36,711

40,797

53,154

58,047

Source: Company data, FSS research

Par Valuations (x)

P/BV EV/EBITDA Dividend yield (%)

Page 3 of 5

Finansia Syrus Securities Public Company Limited Head Office

Thaisummit Tower

Alma Link

Amarin Tower

Central Pinklao 1

999/9 The offices at Central World 18th, 25th Fl., Rama 1 Rd., Patumwan, Bangkok

1768 Thaisammit Tower Building, 5th, 31th Fl., New Petchburi Road, Bangkapi, Huaykwang, Bangkok

9th, 14th, 15th Fl., Alma Link Building 25 Soi Chidlom, Ploenchit, Lumpini, Patumwan, Bangkok

496-502 Amarin Tower 20th Floor, Pleonchit, Lumpini, Pathumwan, Bangkok

7/129-221 Central Pinklao Office Building, Room 2160/1, 16th Fl., Baromratchonnanee Road, Arunamarin, Bangkoknoi, Bangkok

Bangkapi

Bangna

Sindhorn 1

Kian Gwan (Sindhorn 2)

Sindhorn 3

3105 N Mark Building, 3rd Floor, Room A3R02, Ladprao Road, Klongjan, Bangkapi, Bangkok

589 Tower 1 Office, 19th Floor, Room 589/105 Moo 12, Bangna-Trad Road, Bangna, Bangkok

130-132 Sindhorn Building 1, 2rd Floor, Wireless Road, Lumpini, Pathumwan, Bangkok

140/1 Kian Gwan House II 18th Floor, Wireless Road, Lumpini, Pathumwan, Bangkok

130-132 Sindhorn Building 3, 19th Floor, Wireless Road, Lumpini, Pathumwan, Bangkok

Ladprao

Prachachuen

Rang sit

Abdulrahim

Rattanatibet

555 Rasa Tower 2, 11st Floor, Unit 1106, Phaholyothin Road, Chatuchak, Bangkok

105/1 B Building, 4th Floor, Thessabansongkhrao Road, Ladyao, Jutujak, Bangkok

1/832 Moo 17 Kukod, Lumlookka Pratumtanee

990, Abdulrahim Place, 12nd Fl., Room 1210, Rama IV Road, Silom, Bangrak, Bangkok

576 Rattanatibet Road, Tumbon Banggrasor, Aumphoe Muang, Nonthaburi

Sriracha

Khonkaen 1

Khonkaen 2

Khonkaen 3

Udonthani

135/99 (G fl.) Sukumvit Road, Tumbon Sriracha Aumphoe Sriracha, Chonburi

311/16 2nd Floor, Klangmeung Road, Tumbon Nai Meung, Aumphoe Meung, Khonkaen

26/9 Moo 7, 2nd Floor Sri Chant Mai Road, Tumbon Nai Meung, Aumphoe Meung Khonkaen, Khonkaen

311/1 Khang Meung Road, Tumbon Nai Meung, Aumphoe Meung Khonkaen, Khonkaen

197/29, 213/3 Udon Dusadee Road, Tumbon Mak Khaeng, Aumphoe Muang Udon Thani, Udon Thani

Chiangmai 1

Chiangmai 2

Chiangmai 3

Chiangrai

Measai

308 Chiang Mai Land,

310 Chiang Mai Land,

Maliplace Building 32/4 moo 2

Chang Klan R., Chang Klan

Chang Klan R., Chang Klan

1 fll., Room B1-1, B1-2

Muang Chiangmai

Muang Chiangmai

Tumbon Maehia Chiangmai

353/15 Moo 4, Tumbon Rimkok Aumphoe Muang, Cheangrai

119 Moo 10, Tumbon Maesai, Aumphoe Muang, Cheangrai

Nakornratchasima

Samutsakorn

Phuket

Hatyai 1

Hatyai 2

1242/2 Room A3, 7 fl., The Mall Ratchasima

813/30 Norrasing Road, Tumbon Maha Chai, Aumphoe Meungsamutsakorn, Samutsakorn

22/18 Luangporwatchalong Road, Tumbon Talad Yai, Amphoe Muang Phuket, Phuket

200/221, 200/223 Juldis Hadyai Plaza, 2rd Floor, Building, Niphat Uthit 3 Road, Aumphoe Hadyai, Songkhla

106 Prachathipat Road, Aumphoe Hadyai, Songkhla

Hatyai 3

Trang

Suratthani

Pattane

200/222, 200/224, 200/226 Juldis Hadyai Plaza, 2rd Floor, Building, Niphat Uthit 3 Road, Aumphoe Hadyai, Songkhla

59/28 Huaiyod Road, Tumbon Thaptieng, Aumphoe Meungtrang, Trang

173/83-84 Moo 1 Watpho-Bangyai Road., Tumbon Makamtia, Aumphoe Mueang, Suratthani

300/69-70 Moo 4, Tumbon Rusamirae, Aumphoe Meung, Pattane

Mittraphap rood Tumbon Nai Muang Aumphoe Muang Nakornratchasima

Nakornratchasima

Recommendation Definitions BUY HOLD SELL TRADING BUY OVERWEIGHT NEUTRAL UNDERWEIGHT

The The The The The The The

latest close is below our target price and the estimated upside is 10% or more. latest close is below our target price and the estimated upside is 0-10%. latest close is above our target price. latest close is above our target price but the price is expected to be driven by short-term positive factors estimated return is higher than the market average. estimated return is the same as the market average. estimated return is lower than the market average

Note: The expected return may change as market risks increase or decline. DISCLAIMER: This report has been prepared by Finansia Syrus Securities Public Company Limited (FSS). The information herein has been obtained from sources believed to be reliable and accurate; however FSS makes no representation as to the accuracy and completeness of such information. Information and opinions expressed herein are subject to change without notice. FSS has no intention to solicit investors to buy or sell any security in this report. In addition, FSS does not guarantee returns nor price of the securities described in the report nor accept any liability for any loss or damage of any kind arising out of the use of such information or opinions in this report. Investors should study this report carefully in making investment decisions. All rights are reserved. This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of FSS. Investment in securities has risks. Investors are advised to consider carefully before making investment decisions. Finansia Syrus Securities Public Company Limited may act as market maker and issuer of DWs. The company may prepare the research reports on those underlying securities. Investors should carefully read the details of the derivative warrants in the prospectus before making investment decisions.

Page 4 of 5

Thai Institute of Directors Association (IOD) – Corporate Governance Report Rating 2017

Sc ore Range

Rating

Desc ription

100-90

Excellent

80-89

Very Good

70-79

Good

60-69

Satisfactory

50-59

Pass

<50

no logo given

n/a

IOD (IOD Disclaimer) The Corporate Governance Report (CGR) of Thai listed Companies is based on a survey and assessment of information which companies listed on the Stock Exchange of Thailand and the Market for Alternative Investment (“listed companies”) disclose to the public. The CGR is a presentation of information from the perspective of outsiders on the standards of corporate governance of listed companies. It is not any assessment of the actual practices of the listed companies, and the CGR does not use any non-public information. The CGR is not therefore an endorsement of the practices of the listed companies. It is not a recommendation for investment in any securities of any listed companies or any recommendation whatsoever. Investors should exercise their own judgment to analyze and consider any information relating to the listed companies presented in this CGR report. No representation or warranty is made by the Institute of Directors or any of its personnel as to the completeness or accuracy of the CGR report or the information used.

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Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) 1 CG Score 2017 from Thai Institute of Directors Association (IOD) 2 Companies participating in Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of July 31, 2017) are categorised into: - companies that have declared their intention to join CAC, and - companies certified by CAC.

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