Yoma Strategic Holdings - DBS Research 2016-05-20: All guns ablazing

YOMA STRATEGIC HOLDINGS LTD Z59.SI

Yoma Strategic Holdings - All guns ablazing

4Q16 results in line; driven from improvements in all business segments
To capitalise on the improved real estate sentiment by launching new units across Star City and Pun Hlaing Golf Estate
KFC to hit 12 stores by end of FY2017
Maintain BUY, TP S$0.78 4Q16 results in line.

PATIMI came in 8.9% higher at S$8.9m. This is on the back of a 65.8% rise in revenues to S$45.7m.
The strong performance came mainly from its real estate division (26.3m, + >100% y-o-y) due to sale of residences and land development rights (LDRs). This was mainly from a development project in Star City Zone B.
The group has negotiated to re-purchase the 117 unsold units (out of 1,043 units) and resold 90 of the units at a profit to end-buyers.
Non-real estate division continues to grow strongly with the automotive and F&B (KFC) business.

With the elections behind, management is optimistic about the outlook, given improved sentiment post elections.
The group is looking to launch more units in FY17F mainly from Pun Hlaing Golf Estate, which comprise the first phase of a 176-unit condominium, 70 townhouses and 21 villas.
In addition, the group has launched 334 units of its 954 units at Star City Galaxy Towers for sale. The enactment of the condominium law which allows foreigners to purchase up to 40% of a condominium apartment block and gives buyers access to bank financing is expected to facilitate sales in the medium term.

Tourism: Looking ahead, contribution from 'Balloons over Bagan' is expected to increase sequentially in 2H16 due to the peak holiday season.
F&B: The group now has four outlets (as of 4Q15) and is expected to open up to 12 stores by March 2017. The focus is to increase its store count and improve operational efficiency.
Automotive: The New Holland agricultural equipment business will continue to be a main growth driver – Yoma sold 607 tractors (+22.8% y-o-y) and is expected to continue to do well. Yoma's fleet has seen a strong uptake in number of vehicles under lease to 332 as of 31 March 2016 and will provide stable returns to the group.
Myanmar Towers Company Management remains optimistic on the robust outlook for its telecommunication infrastructure business and expects to see strong EBITDA growth from additional tenants from its existing 1,250 towers and also plans to construct 5,000 towers over the coming three years.

Stock price and interest have risen on the back of expected stability in the political climate post elections, which we believe will translate into better prospects across its various business segments.
Maintain BUY, TP S$0.78.

Derek Tan DBS Vickers | Rachel Lih Rui Tan DBS Vickers | http://www.dbsvickers.com/ 2016-05-20

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