Minor International Public Company Limited

Transcription

1 Minor International Public Company Limited Management Discussion & Analysis MINT s financial performance as of 30th June 2008 Summary of Key Financial Performance 2Q08 Performance Minor International Public Company Limited ( MINT ) reported its three-month revenues in 2Q08 of Bt 3,848m increased by 22% year-on-year. Its 2Q08 net profit reported at Bt 351m also showed a solid increase of 52% compared to same period last year. The key contributors remained its core businesses including the food business, which represents 52% of total revenues, and the hotel business, which represents 30% of total revenues. MINT s food business revenue grew 23% y-y due mainly to the addition of 35 new outlets and strong contributions from The Coffee Club and Thai Express which were acquired in January and May, respectively. In 2Q08, the hotel business occupancy rate (OR) maintained at 64% which was similar to the same period last year. International tourist arrivals to Thailand in 2Q08 recorded a strong growth of 15% y-y showing an exceptional increase compared to the previous year growth of 1%. The hotel average room rate (ARR) increased by 12% to Bt 5,390 per night. The strong increase of ARR was driven by 1) a high demand in luxury hotels especially at Four Seasons Koh Samui, and Chaing Mai; 2) increased average room rates of Marriott group of hotels; 3) room renovation and brand conversion of a hotel in Maldives from Bodu Huuraa to Anantara Veligandu since January H08 Performance Results in the first half of the year were also impressive with total revenues of Bt 8,212m up 20% y-y and net profit up 62% y-y to Bt 1,101m. Key contributors are food business at 47% and hotel business of 35% of total revenue. Revenues from food business during 1H increased by 17% y-y due to the outlet expansions of 53 outlets (excluding Thai Express) since end of last year and the accounting consolidation of Thai Express starting this May. On its hotel business, the Company was able to maintain the occupancy rate at 72% where average room rate increased significantly by 18% y-y to Bt 6,408 per night. The increase of room rates were mainly driven by the continued expansion of new hotels in luxury destination, on-going renovation and increasing brand awareness of MINT s hotel brands. Revenues Breakdown 2Q08 2Q07 Change 1H08 1H07 Change (Bt m) ( Bt m) (%) (Bt m) ( Bt m) (%) Food 2,049 1, ,947 3, Hotel 1,136 1, ,896 2, Residential Property Spa Retail Property & Entertainment Management Fee Others Total 3,848 3, ,212 6,

2 As end of 2Q08, MINT reported total assets of Bt 25,196m increased Bt 3,916m compared to year-end 2007 due to the following reasons. 1. Increase of cash and cash equivalents from MINT-Warrant 3 and ESOP exercised proceeds 2. Increase of long-term investment in affiliates and other companies including The Coffee Club, Elewana Afrika 3. Increase of land and project under development including Anantara Phuket Hotel and St. Regis Hotel & Residences. Also include the fixed assets of new food outlets 4. Increased intangible assets from the goodwill from the Company s investment in Thai Express MINT s 2Q08 total liabilities of Bt 13,298 increased Bt 1,726m compared to last year. This was mainly from increased account payables from the investment of Thai Express, The Coffee Club and Elewana Afrika projects. The Company s shareholders equity reported at Bt 11,898 m increased Bt 2,190m due to the increased retained earnings and new equity added due to the exercises of warrant and employee stock options. For its 2Q08 cashflow statement, MINT and its subsidiaries reported the operating cashflow of Bt 2,122 m increased by Bt 1,402 m from the same period last year. The increase was mainly from the company s operating profit. As of 2Q08, the Company and its subsidiaries reported its investing cashflow of Bt 3,034m mainly from the payment f 1) Long-term investment of Bt 1,778m in The Coffee Club, Thai Express, Elewana Africa projects, 2) Project under development and fixed assets of Bt 1,631m, 3) Received loan repayment of Bt 179 m for its Phuket timeshare project. Note that the Company will receive development and business consulting fees for the new Phuket timeshare project accordingly. Its financing cashflow reported the change due to the proceeds received of Bt 1,411m from the exercise of MINT-Warrant 3 and ESOP. In addition, the repayment of short and long-term debts total amount of Bt 127m and dividend payment of Bt 479m. As as result, MINT s net cashflow as end of 2Q08 reported an increase of Bt 142m. New Developments in 2Q08 Hotel Business MINT s new hotel in Bali and the first pure-managed hotel in Bali officially opened in June under name Anantara Seminyak Hotel. Food Business In May, MINT finalized the transaction of its 70% acquisition of Thai Express Concepts Pte Ltd. Thai Express is the casual fast food concept operator with key location in Singapore. The Company currently operates 47 food outlets under brands Thai Express, Shokudo, New York New York, and Hong Kong Café. The current food outlet comprises 34 own equity and 13 franchised outlets. In 2Q08, the Company s total food outlets reported at 964 divided into the own equity if 611 outlets (or 63% of total) and franchised of 353 outlets (37% of total). Thailand outlets in total accounted for 654 outlets and the rest of 310 outlets are international outlets in Australia & New Zealand (for 197 outlets), in China (33 outlets), Middle East (21 outlets), South East Asia (59 outlets). The new opening in 2Q08 accounted for 35 outlets including own equity of 17 outlet and franchise for 18 outlets. Food Outlets by Owner Equity and Franchise Q08 2Q08 Owner Equity Franchise Total

3 Food Outlets by Brand Q08 2Q08 The Pizza The Coffee Club Swensen s Sizzler Dairy Queen Burger King Thai Express Others Total Note: Others include airport outlets and Le Jazz in China Segmentation Performance Albeit the higher contribution on revenues, MINT s food business EBITDA reported a lower contribution compared to hospitality & leisure business. As seen for 2Q08 financial results, MINT s EBITDA were contributed 32%, 61%, and 7% by food, hospitality and leisures, and residential property, respectively. EBITDA Contribution (Bt m) 2Q08 2Q07 Change 1H08 1H07 Change (Bt m) ( Bt m) (%) (Bt m) ( Bt m) (%) Food Hospitality & Leisure ,562 1, Residential Property Total ,270 1, Food Business Performance MINT s food business continued its growth by showing 23% increase y-y of total system sales mainly from continued expansion of new outlets and increased same-store-sales from the better-than-lastyear consumer confidence in Thailand. Note that the Company s total outlets as end of 2Q08 was 964 outlets with the new 35 outlets. The increased same-store-sales and the efficient cost structure provide the superior performance compared to the industry peers. Its 2Q08 earnings profile also strengthened from the full quarter contribution from The Coffee Club, and the consolidated accounting with Thai Express starting May. Food Business Performance by Brand Total-System-Sales (%) 2Q08 2Q07 1H08 1H07 The Pizza The Coffee Club Swensen s Sizzler Dairy Queen Burger King Thai Express Average Note: Average performance based on total operating stores including airport outlets and Le Jazz which currently contributed less than 1% of total food revenues. 3 3

4 Hotel Business Performance From its 16 operating hotels, MINT s 2Q08 hotel performance showed an average occupancy rate at 64% which is the same as the previous year although there were two news hotels adding during the past year. Nonetheless, the average hotel room rate increased to Bt 5,390 per night showing a 12% increase compared to the same period last year. The Four Seasons group of hotels (in 4 locations including Bangkok, Chaing Mai, Chaing Rai, and Koh Samui) showed a strong improvement with occupancy rate of 53% and an average room rate of Bt 8,813 increased by 6% y-y. The strong growth was mainly driven by the room rate of Four Seasons hotel in Samui, Chaing Rai and Chaing Mai. Anantara group of hotels (in 5 locations including Hua Hin, Chaing Rai, Koh Samui, and two in Maldives) also recorded a solid growth of 18% to Bt 6,615, the hotels showed a slight increase in occupancy rate. For the Marriott group of hotels (4 locations including Bangkok, Pattaya, Hua Hin, and Phuket) maintained its strong momentum with the average room rate increased by 5% to Bt 3,811 per night. For the first half 2008 operation, the hotel business showed the occupancy rate of 72% same as the same period last year despite we have two new hotels in addition during the past year. The average room rate increased to Bt 6,408 showing 18% y-y increase. The Four Seasons group of hotels led the pack with the strong performance with 61% occupancy and increased room rate to Bt 9,728 per night on average. The key drivers are the Four Seasons Hotel in Koh Samui, Chaing Mai and Chaing Rai. For the Anantara group of hotels, the performance was also exceptional at 19% increase on average room rate to Bt 8,011 per night where the occupancy remain equal as last year. Marriott group also reported a stronger performance with 9% y-y increase in room rate to Bt 4,651 per night. Total revenues from its hotel operation (not include management income) in 2Q08 reported at Bt 1,136m increased 3% where its 1H revenues of Bt 2,896m increased from the previous year by 11%. Hotel Business Performance by Brand Occupancy (%) 2Q08 2Q07 1H08 1H07 Marriott Anantara Four Seasons Others Average Average Room Rate (Bt/night) 2Q08 2Q07 1H08 1H07 Marriott 3,811 3,640 4,651 4,275 Anantara 6,615 5,615 8,011 6,706 Four Seasons 8,813 8,336 9,728 8,588 Others 6,520 3,154 8,101 2,359 Average 5,390 4,825 6,408 5,427 Note: 16 hotel properties in total including the newly opened Anantara Seminyak Bali Residential Property Business Performance The Company currently sell the residential property under its mixed use development in Samui namely The Estate Samui which located in the same are of the Four Seasons Samui Hotel. From total 14 residential units, we already recorded sales 3 units in and another 2 unit recorded in 1H08 (one each in 1Q and 2Q). The Company plans to close the sales by In addition, the Company is under the pre-booking for its St Regis Residence which is also the mixed use project under brand St Regis. The condominium is considered one of the most luxury condo in Bangkok which expected to complete by early In 2Q08, the Company recorded sales from its residential property business of Bt 133m showing a substantial increase of 455% compared to same period last year. For its 1H performance, revenues from selling residential reached Bt 274m increased by 143% y-y. 4 4

5 Spa Business Performance MINT currently operates spa business under brand Anantara and Mandara Spa for its own hotel spa operations and under management contract in Thailand and International. As end of 2Q08, its spa business operated in 26 hotels in Thailand, China, Maldives, Tanzania, Jordan, UAE, Turkey and India. Revenues from spa business in 2Q08 recorded at Bt 84m slightly declined y-y. Its 1H08 performance showed increase of 4% y-y of Bt 194m. Although the increasing competition in spa business especially in Thailand, the Company is still able to maintain its profitability giving the diversified locations and its fee income from managing other hotel spas. Retail Properties & Entertainment Businesses Performance In 2Q08, total revenues from its retail properties and entertainment business reported at Bt 141m, increased 9% y-y. Its 1H performance revenues also showed an increase of 9% y-y of Bt 291m. Revenues from its retail properties was driven mainly from the improved performance of the food center in Pattaya and the rental income from its retail shopping center businesses. Financial Ratio Analysis June 30, 2008 June 30, 2007 Profitability Ratios (First 6 month) Gross profit margin (%) 64.44% 65.23% Net profit margin (%) 13.40% 9.99% Return on Equity (%) 10.19% 8.13% Efficiency Ratios Return on Assets (%) (First 6 months) 4.47% 3.76% Collection Period (days) (2 nd Quarter) Liquidity Ratios June 30, 2008 December 31, 2007 Current assets/current liabilities (times) Leverage & Financial Policy Total liabilities to Equity (times) Net interest bearing debt to equity (times) June 30, 2008 June 30, 2007 Interest coverage (times) (First 6 months) The Company s financial ratio in 2Q08 despite the low season showed a resilient performance. Its gross profit margin showed a slight drop y-y, but still at a strong level at 64.4%. However, the net profit margin was strongly outperformed the previous year to 13.4% compared to 9.9% in 2Q07. This was mainly driven by the increased fee based revenues from hotel management contract and the food franchised revenues and the sales of residential property under the mix-use concept. In addition, the contributed profit from The Coffee Club and accounting consolidation of Thai Express. This all factors for the improvement of return on equity to 10.2% compared to last year of 8.1% albeit the slight increased capital base mainly from MINT-Warrant 3 and ESOP exercise in this year. For its efficiency ratio, the Company return on assets also showed an outperformance with 4.7% in 2Q08 compared to 3.8% in the same period last year. Its collection days maintained at 14 days equal to last year. Its current ratio reduced to 0.73x from 1.09x due to used of fund for the investment of Thai Express and for the construction of Anantara Phuket and St Regis. The Company s balance sheet strengthened significantly giving the net interest bearing debt to equity reduced to 0.71x compared end of last year of 0.86x. Likewise, the interest coverage ratio posted stronger at

6 compared to 6.56 in the previous year due to the strengthened cashflow from operations, increased net income, account receivables repayment and proceeds received from residential property business. Management Review and Forward Looking Statement MINT s 1H08 financial performance reported another record growth of 62% y-y increase in net profit and 20% in revenues. Its 2Q08 performance, albeit the low season, showed a solid y-y growth of 52% on net profit and 22% on revenues. The growth was proved resilient compared to its industry peers amidst the never-ending unfavorable issues in Thailand and global. MINT s 1Q08 solid results was undoubtedly driven by the improved sentiments both tourism and domestic consumptions supposed to be the year that Thai people and especially Thai businessmen, and foreign investors enjoyed the democracy after two years of disappointing economic growth weighted down by domestic political tensions. The year started off well enough in 1Q with economic posted relatively strong 6% growth with private investment and consumption picking up. But the protesters were back on the street at the beginning of 2Q. The political tension had come in a more inopportune time as the global economic environment turned more negative due to soaring oil, food and commodity prices. Inflation jumped to a record high at 7.6% in May and recently 9.2% in July. This putting pressure on consumers and businesses alike as showed in the country s indicator the SET index declining over 20%. Thanks to the management s anticipation, MINT s 2Q performance remained solid both from its organic growth and the recent business acquisition. Organically, MINT s food business same-storesales showed a better-than-expected growth from its existing restaurant outlets while the cost structure was well managed through the top-line driven, pricing mechanism and efficient logistics planning. The new acquisition of The Coffee Club and Thai Express also proved a successful strategic investment giving the strong earnings contribution in this quarter. Its hotel business despite a low season also showed a solid Revpar growth of 12% y-y due to the ability to increase room rates. This luck was not come in a surprise as the management believes in the Company s wellpositioning and its leading market position, and the right product that proved to be differentiate from the industry peers. The hotel management contract business although at the very early stage started to show its significant contribution making MINT s hotel profitability strengthen during the low tourism season. Its mixed-used development concept continued its strong performance with another luxury villa sold in this quarter. In sum, we believe a net profit growth over 60% y-y growth for the first six-month was the result of the corporate long-term strategic planning, the efficient operation and the management s prudent investment policy. According to our long-term commitment, MINT s management believes in our employees capacity and their ability to cope with the changing business environment. Our new food outlet and hotel expansion in the later half of this year remain intact. Our strength currently is not only well diversified portfolio, but also the source of income and customers exposure. We believe our food business will be strengthened giving the strong cashflow from current food brands and the strong growth to be contributed by the newly acquired brands. The growth and trend in this front by looking at domestic consumption sentiments remain solid until date. On one hand, we believe the global credit crisis could also bring a good opportunity to MINT in term of hotel property. Apart from the purely managed hotel Anantara Seminyak in Bali which was just opened in late 2Q08, the new luxury pool villa hotel Anantara brand will also be opened in Phuket in this October. Giving its upper upscale positioning, we believe MINT s hotel room rate especially for Anantara group of hotels will be accordingly accelerated. With a strong track record of earnings growth over 30% p.a. during the past 10 years, our balance sheet today is much stronger than in the past and we are quite confident in our long-term commitment in delivering no less than 20% earnings growth p.a. during the next 5 year. Signature... (Pratana Manomaiphiboon) Director 6 6

7 7 7