YOMA STRATEGIC HOLDINGS LTD (SGX:Z59)
Yoma Strategic - Proxy To Myanmar
Investment case: strength through diversification
- Yoma Strategic (SGX:Z59) is a leading conglomerate in Myanmar, with businesses spanning real estate, F&B, automotive & heavy equipment, financial services and investments. In Nov ‘19, Ayala Corporation announced that it will invest US$155m at S$0.45/share for a 20% stake in Yoma Strategic via the issuance of primary shares.
- Yoma Strategic also owns a 44% interest in Wave Money, which is a leading mobile financial services provider in Myanmar. In 2020, Wave Money’s OTC business transacted a total remittance volume of ~ US$8.7b, significant increases compared to the ~ US$4.3b transacted in 2019.
Catalysts: wave money to lead recovery
- Yoma Land has a huge land bank of 8m sf, which is equivalent to 10-15 years of current sales. Unrecognised revenue of US$19m for the sold units at StarCity and Pun Hlaing Estate is expected to be realised as construction progresses.
- Meanwhile, the resumption of the Wave Money app on mobile 4G networks is expected to help meaningfully in the recovery of transaction volumes and monthly active users.
- Moving forward, management will seek on driving profitability in all of its businesses, which include permanently or temporarily closing a third of its F&B restaurants if they can no longer be operate profitability.
Valuations: deep discount to book value
- Yoma Strategic will stay focused in continuing to reduce operating costs and defer most capex to conserve cash and maintain liquidity (net gearing of 30.4%). Further stringent financial management measures have been implemented since 1 Feb and cost efficiency gains will be realised in the coming financial periods. The political uncertainties in Myanmar have created an overhang on the stock which now trades at about 0.42x P/B.
Risks: political crises remains uncertain
- The military coup in Myanmar continues to evolve and remains unclear at this stage. While there are some intermittent disruptions in some of Yoma Strategic’s businesses, many of its services have already resumed operations.
- Nevertheless, management believes it still too early to ascertain the longer-term impact of the current political situation on its businesses and will continue to monitor the development closely.
- See
- Yoma Strategic is one of the participating companies of Invest ASEAN 2021 by Maybank Kim Eng.
Eric Ong
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-06-21
SGX Stock
Analyst Report
99998
SAME
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