MINT’s hotel operations in Europe are stronger with RevPar in April-May up 62% from 1Q23, moving 30% above pre-COVID-19 level, underwritten by sustained high ARR and growing occupancy rate from leisure and business travel demand. Over the past three months, MINT’s share price has risen 7%, beating the SET’s drop of 6%, but valuation is not demanding at 29x 2023E, its historical average. We believe strong earnings in 2Q23 (+YoY, +QoQ) and better 2H23 earnings will further support price outperformance. We maintain our 3-month tactical call of Outperform with an end-2023 TP of Bt42/share (based on SOTP valuation).
Strong operations in Europe. A conversation with MINT indicated strong operations at NH Hotel Group (NHH, MINT’s lead operations in Europe). In April-May, NHH’s occupancy rate was ~72% (vs. 69% in 2Q22 and 60% in 1Q23, slightly below pre-COVID-19 level) driven by leisure demand in Europe’s high season for tourism and growing business travel demand, with continued strong ARR at ~€150/room (+17% YoY and +30% QoQ, 36% above pre-COVID-19 level). This brought RevPar to ~€108/room (+23% YoY and +62% QoQ, 30% above pre-COVID-19 level). According to EUROCONTROL, in June, the 7-day flight average in Europe showed a rise of 7% YoY and 9% MoM, suggesting continued high travel in Europe. MINT is monitoring the impact of an economic slowdown but thus far in 3Q23 it is seeing healthy forward bookings at NHH.
Thailand improving, Maldives slow, SSS solid. in April–May, RevPar for owned hotels in Thailand was ~Bt6,345/room (+86% YoY but -30% QoQ on seasonality, 6% above pre-COVID-19 level) while RevPar for hotels in Maldives was ~US$428/room (-16% YoY off a high base and -51% QoQ on seasonality, 10% below pre-COVID-19 level). The food business in Thailand is doing well, particularly during the long Songkran holiday, with SSS in April-May at ~10% (vs. 5.8% in 1Q23) while China is recovering after re-opening with SSS in April-May at ~40% (vs. 15.1% in 1Q23).
2Q23 preview. We preliminarily estimate MINT’s 2Q23 core profit at Bt2.8bn, doubling from the core profit of Bt1.2bn in 2Q22 and up from a core loss of Bt647mn in 1Q23. Based on our 2Q23 preview, 1H23 results will account for 35% of our full-year forecast. We maintain our core earnings projection at Bt6.2bn in 2023, suggesting better earnings in 2H23.
Outperform rating. We maintain our Outperform rating on MINT with an end-2023 TP of Bt42/share based on SOTP valuation. Over the past three months, MINT’s share price has risen 7%, beating the SET’s drop of 6%, but we view the valuation as not demanding at 29x 2023E, its historical average (2012-19).
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.
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