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MINT CONTINUES TO STRENGTHEN ITS PIPELINE WHILST REPORTING ROBUST RESULTS IN 2Q13, INCREASE OF 23% IN NET PROFIT Y-Y

BackAug 09, 2013

Minor International (“MINT”) is well-positioned for growth going forward, with persistent developments of expansion pipeline, as evidenced by the activities in July 2013. MINT acquired Cypress Lakes Resort in Hunter Valley, Australia through Oaks. Cypress Lakes Resort is located on almost 100 hectares of land, with 232 villas, food and beverage facilities, conference facilities, two swimming pools, and two tennis courts. In addition, Oak’s Oasis property in Caloundra, Queensland is undergoing renovation, together with the development of a new water park. Earlier, MINT announced the 50% acquisition of the luxury boutique hotel brand Per AQUUM Retreats • Resorts • Residences, which manages three award-winning properties – two in the Maldives, Huvafen Fushi and NIYAMA, in addition to Desert Palm in the Emirate of Dubai in the UAE. The brand has vast potential for expansion going forward. For the restaurant business, the five restaurant outlets under Burger King, Swensen's, The Coffee Club, and Thai Express brands in the Maldives have taken off very well, with sales well above expectation. The plan to add two restaurants under Burger King and The Coffee Club brands in September is still on schedule. In addition, MINT entered into a partnership with Al Nasser Holdings to expand its restaurant business of owning, operating and franchising MINT’s restaurant brands in the Middle East and North Africa (MENA) region, with the initial plan to open The Coffee Club outlets in the UAE.

MINT reported strong net profit of Baht 429 million in 2Q13, an increase of 23% y-y from 2Q12, mainly attributable to improved performance of all three businesses. For 1H13, MINT’s net profit rose by 25% to Baht 1,838 million from core net profit (excluding insurance claim from floods received) of Baht 1,474 million recorded in the same period of last year.

MINT’s hospitality business, which operates company-owned resorts, manages resorts and serviced suites for others, sells residential properties and operates a vacation club, achieved y-y increase in net profit of 16% in both 2Q13 and 1H13. The hospitality business saw an impressive growth in 2Q13 despite the temporary closure of Anantara Bophut Samui Resort & Spa, Anantara Veli Resort & Spa in the Maldives and Royal Garden Plaza Bangkok for renovation since April 2013, permanent closure of Hua Hin Marriott Resort & Spa since July 2012, together with the negative foreign exchange impact on our overseas hospitality business from the strengthening of the Thai Baht. With strong increase in Thailand’s tourist arrivals, owned hotels, which contributed 46% of total hospitality revenues in 1H13, saw organic occupancy increase of 7%, together with ADR increase of 7%, resulting in RevPar increase of 18%. Real estates business remained an important contributor to the hospitality business with its revenue increasing 25% y-y in 2Q13 and 12% y-y in 1H13, primarily from the increase in sales of the vacation club. In addition, all of the sellable St. Regis Residences units have been sold, while the remaining proceeds and revenue recognition are expected in the second half of the year. MINT expects the hospitality business to continue to perform well in the second half of 2013, with the continued momentum of the performance of the company-owned hotels portfolio, managed hotels and the expansion plans.

Restaurant business posted robust y-y net profit growth of 17% in 2Q13 and 21% in 1H13 due to the strong organic business operations, as well as the consolidation of Beijing Riverside & Courtyard (“Riverside”) in China. MINT’s restaurant business, which is positioned within casual dining restaurant concept catering to mid-range consumers, tends to be relatively resilient to external factors. The portfolio’s total-system-sales growth in 1H13 was 13.8%, attributable to same-store-sales growth of 2.6%, coupled with store expansion of another 11% y-y. All brands, except The Pizza Company, reported positive same-store-sales growth. During 1H13, The Pizza Company went through the process of re-structuring its menu strategy and marketing plans to increase traffic. The transition is now complete, and MINT expects to see growth in the second half of the year. Excluding The Pizza Company, MINT reported strong same-store-sales growth of 3.9% for the remaining brands in its portfolio in 1H13. MINT believes that the opening of new restaurant outlets alongside business expansion of major retail operators, together with continued growth of the Company’s franchised business, will contribute to strong performance of the restaurant business in the second half of this year. In addition, MINT expects the entire portfolio to achieve the original full-year same-store-sales target

Despite the slow down of domestic consumption, retail trading and contract manufacturing business continued to report revenue growth of 4% in 2Q13 and 16% in 1H13 compared to the same period last year (excluding insurance claim from the flood received in 1Q12). The growth was attributable to the better performance of the higher contribution fashion business, together with fully operational Navasri manufacturing plant in 1H13. As a result, 2Q13 net profit of retail trading business turned positive compared to slight loss in 2Q12, while 1H13 net profit increased over ten folds when compared to 1H12 net profit (excluding insurance claim from the flood received in 1Q12).

About Minor International: Minor International (MINT) is a global company focused on three primary businesses including restaurants, hotels and lifestyle brands distribution. MINT is one of Asia’s largest restaurant companies with over 1,400 outlets operating system wide in 17 countries under The Pizza Company, Swensen’s, Sizzler, Dairy Queen, Burger King, Thai Express, the Coffee Club, Ribs and Rumps and Riverside brands. MINT is also a hotel owner, operator and investor with a portfolio of 92 hotels and serviced suites under the Anantara, Avani, Oaks, Per Aquum, Marriott, Four Seasons, St. Regis, Elewana and Minor International brands in Thailand, Australia, New Zealand, the Maldives, Vietnam, Tanzania, Kenya, the Middle East, Sri Lanka, China, Malaysia and Indonesia. MINT is one of Thailand’s largest distributors of lifestyle brands focusing primarily on fashion, cosmetics and contract manufacturing. Its brands include Gap, Esprit, Bossini, Charles & Keith, Pedro, Red Earth, Tumi, Zwilling J.A. Henckels, ETL Learning and Thaisale. For more information, please visit www.minorinternational.com

 

PERFORMANCE (Bt m)

2Q13 2Q12 % Change 1H13 2H13 % Change
Total Revenues 8,252 7,524 10% 17,888 16,292 10%
Cost of Sales 3,090 2,931 5% 6,400 6,128 4%
Selling & Administrative 3,798 3,282 16% 7,574 6,607 15%
EBITDA 1,364 1,311 4% 3,914 3,556 10%
Depreciation & Amort.  578 543 6% 1,152 1,076 7%
EBIT 786 769 2% 2,762 2,481 11%
Interest Expenses  258  276 -7% 534  547 -2%
Earnings Before Tax 529  492 7% 2,228 1,934 15%
Corporate Tax 83 154 -46% 359  390 -8%
Minority Interest 17 (9) 277% 31 (1) NM
Net Profit as Reported  429  348 23% 1,838 1,545 19%
Fully Diluted EPS as Reported (Bt) 0.1075 0.0944 14%  0.4606 0.4192 10%
Fully Diluted Shares (mn) 3,991 3,686 8% 3,991 3,686 8%

Note: Share of Profit is included in other revenue.