MINT – Preview 3Q24: Healthy core profit

We expect MINT to report healthy core profit of Bt2.7bn in 3Q24 up 18% YoY, on stronger hotel operations and improving EBITDA margin, but down 17% QoQ on seasonality; net profit will be pulled down by an unrealized FX loss. Risk/reward looks attractive: share price has fallen 4% over the past month vs. the SET’s -0.1%, to trade at 24x 2025 PE, below -1SD of its historical average. MINT is on our top pick list. Outperform with end-2025 TP of Bt36/share.

Preview 3Q24: Expect healthy core profit; net dragged by unrealized FX loss. We expect MINT to report a core profit of Bt2.7bn in 3Q24, up 18% YoY on stronger hotel operations and improving EBITDA margin, but down 17% QoQ on seasonality (lower season in Europe). Core operations are healthy, but the appreciation of the baht against the US$ (by 12% from end 2Q24) will lead to an estimated unrealized FX loss of Bt2.4bn on currency derivatives, chiefly the US$ perpetual debenture. Including this, we estimate net profit at Bt304mn in 3Q24, sinking 85% YoY and 89% QoQ.

Strong hotel business on ARR growth. For NH Hotel (MINT’s lead operations in Europe at ~70% of revenue), in 3Q24, we expect ARR growth to continue to drive with 7% YoY growth (but 9% QoQ drop), with occupancy rate at 72%, up from 71% in 3Q23 but down from 74% in 2Q24. This will bring RevPar up 9% YoY; it will fall 9% QoQ. In Thailand, we expect RevPar to grow 13% YoY and 1% QoQ, boosted by growing ARR (+9% YoY and flat QoQ). We expect the operational YoY uptrend to continue in 4Q24 as MINT is expecting high single-digit growth in revenue for hotel operation in Europe based on forward bookings.

Slow food business. We estimate overall SSS at -2.7% in 3Q24, little changed from -2.8% in 2Q24. At Thai operations, we expect SSS at -0.7% in 3Q24 (vs. +0.7% in 2Q24) off last year’s high base for the operations for Swensen’s. In China, we estimate SSS at -20% in 3Q24 vs. -20.2% in 2Q24. MINT says operations in China improved in October thanks to Golden Week and it plans to launch a new restaurant brand with a lower price point in a response to consumer tightening on spending during economic uncertainty.

EBITDA margin to improve. We estimate EBITDA margin at 29.9% in 3Q24, up from 28.3% in 3Q23 but down from 30.1% in 2Q24 on seasonality. YoY EBITDA margin expansion reflects the better hotel operations and less impact of unrealized FX loss on currency translation from the US$ vs the Sri Lankan rupee (loans for Sri Lanka hotels) and the US$ vs the Brazilian real (lease liabilities for hotels in Brazil); these were not hedged and slashed EBITDA margin in 2Q24.

Some upside to our 2024 forecast. Our preview suggests 9M24 will account for 69% of market consensus and 72% of our 2024 forecast. We see 3-4% upside to our full-year forecast. We maintain our forecast and end-2025 DCF TP of Bt36/share (WACC at 7.1% and LT growth of 2%).

Risks. 1) An economic slowdown that would derail travel demand and 2) cost inflation that would damage the profitability of its hotel and food businesses. We see ESG risk as effective environmental management of greenhouse gases, energy, wastewater, and waste (E).