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Minor International Shines: Soaring Hotel Occupancy Signals Stock Revaluation

Imagine finding a treasure trove amidst a clutter of rocks. For the perspicacious investor, that’s what Minor International Public Company Limited (MINT) resembles in today’s market—a gem cloaked by superficial undervaluation. Despite analysts’ sonorous acclaim regarding its robust core and incandescent growth projections, MINT’s stock whispers the enticing enigma of being undervalued. But it’s more than just whispers; there is tangible evidence where the rubber met the road in December: a triumphant cutback in the company’s debt, thanks to a torrent of operational cash flow that rode the financial tide to rarefied heights.

At the financial helm steering MINT with unwavering confidence is Chaiyapat Paitoon, the company’s maestro of money, its Chief Financial Officer. Paitoon is jazzed about the company’s trajectory, with kudos to the stalwart hotels holding the fort in Europe and the Land of Smiles—Thailand. The details sing a rhapsody: over 133 million euros harvested from European business operations that swooped in to pare down debt in December 2023 with the precision of a surgeon’s scalpel.

It doesn’t stop there—the Thai hotel business is strutting its stuff with the system-wide occupancy pirouetting to a hefty 75% in the last month of 2023. And that’s without mentioning the swagger in the average daily room rates—a 10% uptick compared to the previous year is not just a number, it’s a statement. This dashing display of growth struts beyond the figures of both 2022 and, notably, the pre-COVID era of 2019. It’s the financial Broadway, and MINT has its name in dazzling lights. A crescendo of cash flow is on the horizon, promising to knock down the net debt-to-equity ratio from its stoic 1x perch at 2023’s curtain call. Picture this: dwindling interest expenses and ballooning net profit.

While some play the cautious symphony, stock maestros at Phatra Securities and Kasikorn Thai have scored a different tune, casting MINT as the prima donna in the tourism sector’s opera. Why, you ask? Think earnings crescendo in 2024, powered by the sweet melody of escalated travel demand coursing through Europe and Thailand. It’s a rhapsody bolstered by an ovation—the permanent standing ovation of the free Thai-China visa measure. And for an encore, the whispers of extending this visa exemption concerto to Indian and Taiwanese tourists could turn the tide, ushering in a new wave of growth for MINT’s gilded Thai hotel portfolio.

When it comes to the stock market’s valuation derby, MINT is racing at a pace that belies its potent potential, with a current EV/EBITDA sitting at a modest 8 times. This, my friends, is the stuff of drama when its peers are prancing at an average of 11 times, and MINT’s historical average choreographed a ballet at 13 times. So the question begging to be asked: Is MINT’s stock undervalued? If the spotlight of analysis illuminates anything, it’s that understatement might just be the understatement of the year.

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