PhillipCapital analyst Tan Jie Hui has maintained her “buy” call on Yoma Strategic Holdings and target price of 46 cents after the group’s 2HFY2020 and FY2020 topline met expectations at 98% and 100% of her forecasts respectively.
Despite the impact of the Covid-19 pandemic, 2HFY2020 revenue saw a 25% increase y-o-y, mainly contributed by real-estate development and automotive and heavy equipment, which saw y-o-y increases of 117% and 34% respectively.
While core operating EBITDA remained positive, Yoma Strategic registered lower gross profit margins and net fair value losses from its properties in Myanmar and China, which led to a net loss that was 15x more than expected, says Tan.
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In addition, the group saw losses due to its subsidiaries’ conversion of the US dollar (USD) to the Myanmar kyat (MMK). Yoma also booked its share of losses from Memories Group, whose tourism operations were affected by Covid-19 and translation losses on borrowings.
Gross profit margins in FY2020 plunged to 32% from FY2019’s 50%, which was attributable to lower real-estate service revenue, which contributes one of the highest gross profit margins to the group.
Other culprits were lower-margin products at Star City and lower consumer margins following higher packaging and delivery costs.
Looking ahead, Tan estimates Yoma’s F&B segment and Yoma Motors be remain “weak” in the near-term, but expects FY2021 group topline to be supported by “significant unrecognised revenue” at Yoma Land and Yoma Motors.
Tan is also looking at a turnaround in FY2022 when Yoma Central and Star Hub will be completed.
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Upon its completion in mid-FY2022, Yoma Central is expected to generate US$90-US$110 million ($120.5-$147.3 million) of recurring revenue.
For Star Hub, it is expected to be completed by end-2021, where prominent companies in the technology and finance sectors have already committed to over 50% of the office space.
“Rental yields here are estimated in the mid-teens, to be generated from FY2022,” says Tan.
“Our valuation metrics and target price remain largely unchanged, including our 20% holding-company discount. Yoma Land constitutes 86% of its total valuation after net debt and overheads,” she adds.
As at 2.17pm, shares in Yoma Strategic are trading 0.5 cent higher or 1.8% up at 28 cents.
