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Analysts: Weak Properties For Yoma But Strong Business Diversification; 70% Potential Upside!
Aspire, Hot Picks | 05 June 2015
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By: Raymond Leung
Articles (142) Profile

Analysts' updates on iFast Corporation Ltd as at 28/05/2015

Past worries about the growth and prospects of Yoma Strategic (Yoma) were put to bed after its full year financial results were released. It was largely in line with the street’s consensus estimates, boosting analysts’ confidence in the coming year.

71% Growth In Revenue

Source: Revenue of Yoma Strategic, Financial Times

Source: Net Income of Yoma Strategic, Financial Times

Yoma’s FY15 revenue grew by 10.4 percent to $110.9 million from $100.5 million, while net income increased by 71.7 percent to $28.1 million from $16.4 million. The strong growth was mainly attributed to Yoma’s fast growing tourism and automotive sectors.

Upward property price trend in Myanmar contributed to the income as the group’s Star City Building A5 and Lakview G was revalued, increasing by $22.8 million. This managed to offset Yoma’s fair value loss of $6.5 million from the weaker agriculture sector and slower real estate sales.

Weak Property Sales But Strong Rentals

As there is an increasing supply of properties for sale in Yangon, Yoma also face stronger competition from other property developers. Analysts expect property sales to be moderate because of the general slowing down of the property market.

However, Star City A5 is ramping up its pace on rentals. In Yoma’s report, 100 out of 150 units were leased out, an increase from the original 66 units previous quarter.

Yoma To Diversify Businesses

Despite the weak real estate sales, Yoma’s management has been actively diversifying the group’s business strategy. It is moving away from real estate and into automotive and tourism.

It is apparent from their recent quarter that this strategy is working fairly well for them. The slowing property sales were supported by the revenue from automotive, tourism and other sectors.

Yoma is looking at opening its first Kentucky Fried Chicken (KFC) branch in Myanmar somewhere in 2016. Two more outlets have also been scheduled to open in FY16.

These initiatives by the management are aimed at diversifying its earnings base. Yoma is looking at deriving 50 percent of its revenue from non-real estate businesses.

Buy The Myanmar Growth Story

They are bullish on Yoma’s growth of its businesses in other sectors other than real estate, which is expected to make up for the losses in its real estate business.

Despite the price target for Yoma dropping from $0.82 to $0.78, analysts from DBS Group Research remain optimistic about the Myanmar growth story as they reiterated their “Buy” call.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

Yoma Strategic Hldgs  0.315 -0.010 -3.08%   
Business: Co operates mainly in Myanmar under several business segments. [FY18 Turnover] Automobile (40.5%), real estate (20.8%), real estate services (18.4%), consumer (12.9%), financial services (6.2%), investments & others (1.2%).

Insight: Feb-19, 3Q19 revenue jumped 12.1% to $27m mainly a... Read More

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