MINT - 3Q24: Core profit in line

MINT reported a weak 3Q24 net profit of Bt149mn (down 93% YoY and 95% QoQ), pulled down by unrealized FX loss on currency derivatives from the strengthening of the baht against the US$. Excluding this shows healthy core profit of Bt2.6bn, up 16% YoY but down 18% QoQ, in line with INVX and market consensus. Behind the YoY core earnings growth is strong hotel operations; the QoQ drop is due to lower season in Europe. We expect core earnings to continue to trend up YoY in 4Q24, but drop QoQ on seasonality. We see valuation as attractive, trading at 22x 2025 PE, nearly -2SD of its historical average. MINT is on our top pick list and we rate it Outperform with end-2025 TP of Bt36/share.

3Q24: Weak net profit from extra items, core in line. MINT reported a weak 3Q24 net profit of Bt149mn (down 93% YoY and 95% QoQ), with extra loss of Bt2.5bn on unrealized FX loss on currency derivatives from the strengthening of the baht against the US$. Excluding this shows a healthy core profit of Bt2.6bn, up 16% YoY but down 18% QoQ, in line with INVX and consensus. The YoY core earnings growth was underwritten by strong hotel operations while the QoQ drop reflected lower season in Europe.

Highlights.

• NH Hotel (MINT’s lead operations in Europe) reported a core profit of €75mn in 3Q24 (or ~Bt2.7bn), up 33% YoY but down 22% QoQ on seasonality. Key was a stronger ARR at €152/night (+7% YoY but -5% QoQ) and high occupancy rate at 72% (from 71% in 3Q23 and 74% in 2Q24) that brought a stronger RevPar at €109/night (+9% YoY but -7% QoQ).
• Food business: Overall SSS was -2.7% in 3Q24 (vs. -2.0% in 3Q23 and -2.8% in 2Q24). By location, Thailand reported a stronger SSS at -0.7% while China was weakest at -20.0% and Australia was -1.6%.
• Interest-bearing debt to equity was 1.10x (as of September 30, 2024), down from 1.11x (as of June 30, 2024), still below its debt covenant of 1.75x. Net debt to equity was 0.98x, moving toward its target of 0.8x.

4Q24 earnings outlook. 9M24 core profit accounted for 69% of market consensus and 71% of our 2024 forecast. We see small upside of 2-3% to our full-year forecast and thus maintain our projection. In 4Q24, we expect core earnings to continue to move up YoY as MINT expects high single-digit growth in revenue at hotel operations in Europe based on forward bookings, but earnings will fall QoQ due to lower season in Europe. Our end-2025 DCF TP is 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).