Yoma Strategic Holdings - CIMB Research 2015-12-09: Hope for a new future

YOMA STRATEGIC HOLDINGS LTD Z59.SI

Yoma Strategic Holdings - Hope for a new future

Possible political reform towards a democratic government in Myanmar may pave the way for continuous economic growth.
Despite a slower FY3/16F, property sales may come back in FY3/17F, pending a peaceful handover of power.
The group to open more KFC stores in the remaining part of FY16 and FY17.
Management is committed to continuing to expand its non-real estate businesses.
Maintain Hold with a target price of S$0.49 based on 35% discount to FY16 RNAV.

The general election held on 8 Nov 2015 was an historic milestone in Myanmar.
The National League for Democracy (NLD), led by Aung San Suu Kyi, won a landslide victory. President Thein Sein vowed that the government and military would respect and accept the results, and cooperate with the NLD for the formation of a new government.
International observers rated the election process as overall above expectations, citing the orderly voting process and transparent counting.

Back from years of military rule and western sanctions, Myanmar has enormous scope to catch up with its ASEAN peers. The World Bank and IMF expect Myanmar’s GDP to expand at a high single-digits growth rate in 2015/2016, topping the rest of the ASEAN bloc.
Independent researchers believe that there are plenty of investment opportunities in various areas such as consumer goods, education, financial services, infrastructure, telecommunication, tourism, etc.

Yoma has seen a significant slowdown in its residential property sales since early-2015 as buyers adopted a “wait-and-see” attitude ahead of the country’s general election.
Management believes that Myanmar’s residential property market is likely to remain slow in the coming quarters until the new government is formed by Apr 16.
As such, the group would phase its project developments according to market conditions.

Management has the vision of continuing to build up the group’s non-real estate division to match the scale of the group’s real estate business by 2020.
As of 2QFY16, the nonreal estate division, mainly the automotive and food & beverage businesses, formed 39% of group revenue.
We expect the growth momentum of the group’s non-real estate businesses to remain strong in the medium term, underpinned by the strong demand for the New Holland tractors and the opening of more KFC stores.

Yoma is a Hold.
Our target price of S$0.49 is based on a not-so-heavy 35% discount to FY16 RANV, as we are hopeful that a peaceful handover of power in Myanmar would pave the way for Myanmar’s continuous economic growth and increase property demand.
Positive newsflow on Myanmar’s democratic reform process is a key near-term catalyst.

Roy CHEN CIMB Securities | William TNG CFA CIMB Securities | http://research.itradecimb.com/ 2015-12-09

CIMB Securities SGX Stock Analyst Report HOLD Maintain HOLD 0.49 Same 0.49