Yoma Strategic recorded another solid year in FY2016

Source: Yoma Strategic Holdings Limited

Yoma Strategic Holdings Limited, a diversified company with various business interests in Myanmar, recorded another solid year of net profit growth with a 32.6% rise in FY2016 to S$37.2 million, while net profit attributable to shareholders for the final quarter ending March 2016 fell by 16.5% to S$8.2 million from $9.8 million in the previous year’s quarter.

A brief financial summary of Yoma Strategic Holdings Limited

Source: Company financials
Source: Company financials

The 65.8% yearly revenue growth for the quarter ending March 2016 was driven by the performance of the Group's non real-estate businesses and robust contributions from its telecommunications towers investment. The real estate division business improved in 4Q2016 as a result of the smooth transition of the new government in Myanmar following the November 2015 elections.

However, the yearly change in total revenue growth in FY2016 was merely a 0.8% increase. The major revenue drivers in FY2016 are shown as follows:

Source: Company financials

The end of FY2016 saw revenues from the sales of residences and LDRs fell by 40.5%, while Yoma’s automotive division largely held up the group with close to a four-fold increase in revenues to S$29.97 million in FY2016. Management attributed the reasons for the fall in sales of residences and LDRs due to:

a) The sale of LDRs to Zone C amounting to S$25.24 million in FY2015 while there was no such sale in FY2016. (Zone C is an extension of the various developments by Yoma Strategic and Thanlyin Estate Development (TED) located in Thanlyin Township, Yangon, Myanmar).

b) The hold-back of sales in Pun Hlaing Golf Estate (PHGE) until the units under construction have been substantially completed in order to ensure better pricing and sales results.

FY2017 outlook and beyond

Management noted that the Asian Development Bank (ADB) has forecasted Myanmar's economic growth is expected to be 8.7% in 2017, and this makes the country one of the fastest growing economies in Asia. Management thinks that the expected high economic growth will give to rising confidence and positive business impact on the company’s operations.

For the Real Estate division, the company plans to launch the first phase of the 176-unit condominium, 70 townhouses and 21 villas at PHGE. The new projects, with 27 houses from existing launches are expected to drive the company’s revenue in PHGE in the next two to three years. In the meantime, Yoma has launched 334 of its 954 units at its Star City’s Galaxy Towers for sale.

The company expects real estate activities at PHGE and Star City to pick up from the pre-election lull. This, along with amendments in the condominium law allow foreigners to purchase up to 40% of the condominium apartment block and give buyers’ access to bank financing.

For other divisions including Automotive, Consumer and Investments, the FY2016 results have also shown growth in these segments, particularly with its Automotive segment which saw sales of tractors made by The New Holland agriculture equipment soar by a yearly increase of  239.4% to S$29.97 million in FY2016.

The automotive division is also showing progress with its New Holland tractor and Yoma Fleet Leasing business which showed robustness in sales. However, the growth is somewhat muted by the changes in regulations covering certain commercial and passenger vehicles. These changes may slow down its sales for Hino and Mitsubishi.

What are the financial estimates for Yoma Strategic?

Source: SGX Stockfacts
Source: SGX Stockfacts

Based on SGX Stockfacts figures, with P/E at around 25.7 times for Yoma Strategic, and no dividends paid, its historical price-to-earnings (P/E) ratio is located at the top most range of P/E measures of its peers. The current stock price of Yoma Strategic as of May 19 is $0.52 per share, unchanged from the opening price.

However, unlike the rest of the other SGX-listed developers, Yoma Strategic is a Myanmar-centric company and was one of the pioneer publicly-listed group that made its first maiden listing of one of its subsidiary companies, First Myanmar Investment (FMI) on the Yangon Stock Exchange in March this year.

With the announcement of the latest news on the relaxation of sanctions in Myanmar by the United States, it is expected Yoma Strategic stands a high chance of attracting more investor interests for its potential, and the expected growth in the country.

Disclosures: This article is written by Tay Hock Meng, I have a minority equity interest in Yoma Strategic Holdings Limited.

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About Peak Hour 87 Articles
Hock Meng has 12 years of financial industry experience, including three years working as a research associate for a hedge fund company in Wall Street, US, with assets under management (AUM) close to US$400 million during its peak in 2008. Hock Meng is a Chartered Alternative Investment Analyst (CAIA) holder and passed his Level I Chartered Financial Analyst examinations. Hock Meng is licensed to provide investment advisory services in the area of unit trusts, dividend portfolio construction, securities wrap services, and life insurance planning