Yoma Strategic Holdings - RHB Invest 2016-11-09: Remains the key proxy to the burgeoning opportunities in Myanmar

YOMA STRATEGIC HOLDINGS LTD Z59.SI

Yoma Strategic Holdings - Remains the key proxy to the burgeoning opportunities in Myanmar

Yoma Strategic (YOMA) reported 2Q net profit of SGD8.5m, bringing its interim earnings to SGD10.1m. This represented 40% of our full year estimate. The numbers are broadly in line with our estimates given a seasonally stronger second half.
The Group's core businesses saw broad-based growth with 2Q revenue up 25% to SGD25m. At its real estate division, property sales were higher at Pun Hlaing Golf Estate and rental income generated from its investment properties increased. However, the property market in Yangon remains slow as existing supply are being gradually taken by buyers who prefer to sit on the side-lines awaiting greater clarity on the Condominium Law.

Yoma's newer, non-real estate businesses, meanwhile, are ramping up steadily, with a network of seven stores from KFC and a quarterly revenue run rate of SGD2.7m. The group is on track to ramp to 12 stores by end FY17. The automotive business saw continued YoY growth from both a higher fleet at its vehicle rental business and higher sales of agricultural tractors. However, we expect the non-property businesses to continue to run at losses given the associated overheads and infrastructure costs, with profit contributions only accruing from next fiscal year. Stripping out revaluation gains, the Group incurred an interim operating loss of SGD15m.
On its non-core businesses, Yoma is monetising half of its stake in its telecom tower JV with Axiata for USD35m, while retaining the balance 12.5% stake with a base put price of USD35m. The investment has generated a 250% gain for Yoma from its original USD20m investment cost. Proceeds from the partial sale will be deployed to its core businesses.
Separately, the Group is spinning off its tourism business into a separate listed vehicle, SHC Capital, which will have its own management team and a platform to raise capital independently for expansion.
We continue to like Yoma as a proxy to the burgeoning opportunities in Myanmar, with its early mover advantage and focused capital allocation strategy being key competitive advantages.
Maintain BUY and TP of SGD0.78.

Goh Han Peng RHB Invest | http://www.rhbinvest.com.sg/ 2016-11-09

RHB Invest SGX Stock Analyst Report BUY Maintain BUY 0.780 Same 0.780