MINT and Its Strategy to Grow from International Businesses

Taking over international businesses have proven to be a success for increasing its revenue, but will it be enough to compensate all the debt that MINT has to bear?

Minor International Public Company Limited (MINT) has announced the new strategic plan that it would focus on the international business instead, and would reduce the domestic revenue to 1/3 in five years from the current 45% of MINT’s revenue, which is something worth keeping an eye on.

 

By the looks of how MINT works, it is highly possible that the strategy is to take over international businesses as MINT had asserted that the business MINT aimed to takeover must be a quality asset and high growth in the future while projected internal rate of return (IRR) at 12%.

It is not going to be easy for MINT to find a high-quality business at cheaper prices, but it is also not too hard to achieve as MINT had shown through all acquisitions of international business for the past three years whether it be a restaurant business in Australia, hotel business in Portugal and Spain (NH Hotel Group).

 

This strategy of taking over international businesses may have increased its proportion and profit from international markets at rapid speed, but also at a higher cost as well. This could be seen from the takeover of NH Hotel in mid-2018 with a value of THB 90,000 million. As a result, MINT’s debt-to-equity ratio (D/E) increased to 1.53x.

MINT had to endure the pressure from the question of whether the takeover would give a return worth an interest that it had to bear? Two debentures were issued at the price not exceeding THB 40 billion for the first debenture and THB 3.3 billion for the second one in order to settle part of the loan that was reaching its due date.

Which is why a plan to lower D/E to 1.3x within this year was announced earlier from the company. MINT’s future plans for business expansion and acquisition will depend on whether it could lower the D/E or not.

 

As for the 2018 financial statement, MINT’s growth was quite stable with THB 5,445 million of profit, increased 1% YoY while its total revenue was THB 79,328 million, increased 35% YoY. Diving into the revenue, MINT earned THB 23,604 from the restaurant business, barely increased from THB 23,582 million in 2017 while the hotel business grew 66% to book THB 51,285 million, increased from THB 30,970 million in 2017. Lastly, the distribution and production reflected THB 4,439 million, increased 9% from THB 4,091 million in 2017.

 

Evidently, its revenue grew quite satisfyingly (partly from the acquisition of NH Hotel in the 3rd quarter), but the profit did not seem to grow in the same direction of the revenue. Which is why cost management is very crucial for MINT in order to achieve its goal around 15-20% of profit per year.

It would be very regrettable if all the acquisition did not return a satisfying profit as MINT had hoped.

 

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