SINGAPORE (July 27): OCBC likes the good set of 1Q numbers presented by Yoma Strategic but is tempering its optimism with some caution.
Yoma’s 1QFY18 revenue grew 46.8% y-o-y to $25.8 million, bolstered by growth across various operating segments. Healthy top-line contribution was made by the sale of residences and LDRs.
This came on the back of the group’s share of profits from the sale of residences in Galaxy Towers (StarCity Zone C) and additional share of profits in StarCity Zone B following its completion after management decided to reconfigure units in StarCity’s Galaxy Towers to be more aligned with market preferences.
The group’s automotive & heavy equipment business also put in a good performance, showing 61.3% y-o-y growth to $11.9 million, arising from healthy demand for its New Holland tractors and increased number of leased vehicles.
More encouragingly, management’s efforts at diversification continue to remain on track, with the non-real estate business comprising 58.2% of revenue.
An interim cash dividend of 0.25 cents per share has been declared, while no dividend was declared in 1QFY17.
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“Looking ahead, we note that management sees mild signs of recovery in the Yangon property market, which would hopefully gain further traction with economic development and urbanisation,” says analyst Joseph Ng in a Thursday report.
“We also believe that the group’s automotive & heavy equipment business could receive a boost from favourable government priorities.”
The Myanmar Investment Commission has reiterated that agriculture and construction remain as top priority sectors. This, in OCBC’s view, should be generally positive for Yoma’s automotive & heavy equipment sector.
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Also, U Tun Tun Naing, permanent secretary of the Ministry of Planning and Finance, was reported to have mentioned that arrangements are currently being made to offer agricultural loans to farmers.
“While positive signs emerge, we are still generally cautious, and prefer to wait for further signs of strength especially in the Yangon property market,” says Ng.
“We adjust our assumptions to incorporate these encouraging developments, increasing our fair value estimate from 54 cents to 58 cents. Maintain ‘hold’.
At 11.19 am, shares in Yoma are trading 2 cents lower at 59 cents.
