Yoma Strategic Holdings - CIMB Research 2016-01-28: 3Q boosted by one-offs

Yoma Strategic Holdings - CIMB Research 2016-01-28: 3Q boosted by one-offs YOMA STRATEGIC HOLDINGS LTD Z59.SI 

Yoma Strategic Holdings - 3Q boosted by one-offs 

  • 3QFY3/16 headline net profit surged 240% due to one-off gains; core net profit stayed in the red due to weak residence sales. 
  • Non-real estate segment continued to expand, led by automotive and F&B. 
  • The group made positive progress on the lease extension of the Landmark site. 
  • We expect residence sales to come back in FY17, helped by Myanmar’s newly passed Condominium Law. 
  • Maintain Hold, with a lower TP of S$0.45, based on a 40% discount to FY16 RNAV. 

■ Headline profit boosted by one-offs, core stayed in the red 

  • Yoma’s 3QFY16 headline net profit was boosted by a S$27m revaluation gain on its 25% stake in a telecomm tower development business. 
  • Excluding one-off gains, the group recorded a core net loss of S$4m in 3QFY16, a 2nd consecutive quarterly loss (2Q: S$2.2m loss). 

■ Real estate segment remained slow in 3Q 

  • Revenue of the real estate segment fell 53% yoy from S$21.2m in 3Q15 to S$10m in 3Q16, due to slow residence sales during Myanmar’s President Election. 
  • The slow property sales were partially offset by higher rental income from block A5 of the Star City Zone A and Lakeview block G in PHGE. 

■ Non-real estate businesses continued to expand 

  • Yoma’s non-real estate segment continued to grow in 3Q. Its automotive businesses, including the New Holland tractors and Yoma Fleet leasing business, recorded 35% revenue growth qoq, backed by strong agricultural demand. 
  • For F&B, Yoma opened its 2 nd and 3rd KFC stores in 3Q and has a target of 12 KFC stores by end-FY17. 

■ Positive progress on Landmark lease extension 

  • On 4 Jan 2016, Yoma announced that it has received the approval from the Ministry of Rail Transport on the lease extension of a major site (9.5 acres) for its Landmark project, from the current balance of 25 years to an initial period of 50 years. 
  • The lease extension for an adjacent smaller site (0.5 acres) is pending approval from Myanmar Investment Commission, and should be finalised within the next three months. 

■ Residential property sales may improve in FY17 

  • Management has seen moderate improvement in buying interest in the Star City and Pun Hlaing Golf Estate (PHGE) projects in the past few weeks. As such, it intends to step up marketing efforts and plans to launch new projects at PHGE in the coming months. 
  • Yoma also re-launched the Galaxy Towers (a.k.a., the Star City Zone C) in 3Q. To date, c.20% of the first two blocks (279 units) of the Galaxy Towers have been sold. 

■ Maintain Hold 

  • We cut our FY16F core EPS forecast by 49% to account for the weak 3QFY16 results, while maintaining our FY17-18 estimates as we are looking to a recovery in residence sales, helped by Myanmar’s recently passed Condominium Law (which has allowed foreigners to purchase Myanmar properties, subject to certain conditions).

Roy CHEN CIMB Securities | William TNG CFA CIMB Securities | http://research.itradecimb.com/ 2016-01-28
CIMB Securities SGX Stock Analyst Report HOLD Maintain HOLD 0.45 Down 0.49