Equity Analysis /

Minor International PCL: BUY on dip

  • Bumpy recovery is no surprise

  • Well behaved with highly discipline in capital management

  • Food business is back on track…

Bualuang Securities
26 April 2021

A share price correction (down 12% MTD) presents a good bargain investment price below Bt30, still in the range of Bt28.30-34.88 for replacement value estimate at the base-case to best-case. We maintain BUY rating at a YE21 DCF-derived target price of Bt35 (25% discount to DCF value, 8.8% WACC, 2% terminal growth).

Bumpy recovery is no surprise

We expect larger loss QoQ in core operations at Bt5.5bn in 1Q21 against Bt4.3bn in 4Q20 (from Bt4.8bn loss in 3Q20). But the nadir quarter was surely seen in 2Q20 at Bt7.1bn loss.  A bumpy quarterly result can be blamed on the volatility of COVID-19 outbreak, particularly in Europe and Thailand. Given high uncertainty, MINT has cautiously resumed operations, as now 32% of hotels (by number) remain closed, and 7% for food outlets. COVID-19 impairment will hurt bottom-line in 1Q21, but have no impact on fundamental value due to non-cash and no default risk. MINT has obtained approval to exclude the asset impairment to its equity in the debt covenant calculation until 2024.