TRIS Rating affirms the company rating of Minor International PLC (MINT) and its existing senior unsecured debenture ratings at “A+”. At the same time, TRIS Rating assigns a rating of “A+” to a proposed issue of up to Bt1,000 million in senior unsecured debentures. The proceeds from the new debentures will be used to refinance debts coming due.
The ratings reflect MINT's solid business profile, underpinned by its strong market position, diversified portfolio of businesses, and wide geographic coverage. The ratings also take into consideration the volatile nature of the hotel industry, plus the high level of competition in the restaurant and retail trading segments. The ratings also reflect the high level of leverage mainly from expanding its hotel portfolio during the past few years.
In 2017, MINT reported Bt55,001 million in revenue, up by 8% from a year earlier. Almost all business segments grew, led by strong results in the hotel segment and a rise in the amount of property sold. Operating profit before depreciation and amortization, as a percentage of sales, was 16.13%, up from around 15% during 2015-2016. The improved profitability was a result of cost management efforts in the restaurant segment, the adjustment of the Anantara Vacation Club (AVC) sales model, and higher property sales which carry a high profit margin.
MINT’s capital structure improved in 2017 mainly from a capital injection from the exercise of warrants of Bt7,584 million. The adjusted debt to capitalization ratio improved from 57.68% at the end of 2016 to 52.94% at the end of 2017. Cash flow protection, as measured by the adjusted ratio of funds from operations (FFO) to debt, also improved, from 15.54% in 2016 to 16.47% in 2017. TRIS Rating expects the ratio of FFO to total debt to continue to improve from the current mid-teens percentage to around 20% over the next couple of years.
RATING OUTLOOK
The “stable” outlook reflects TRIS Rating’s expectation that MINT will continue to deliver sound operating performance and maintain its strong business profile, supported by the broad portfolio of businesses, both in terms of markets served and geographic coverage.
RATING SENSITIVITIES
MINT's credit upside is limited in the next 12 months, taking into account the current financial risk profile. The downside case could occur if MINT makes any additional, sizable, debt-funded investments as it has limited headroom for a rise in leverage at the current rating level.
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