SINGAPORE (June 29): Yoma Strategic Holdings saw revenue from its non-real estate business surge 33% y-o-y to $65.2 million in FY18, accounting for 60% of its total revenue, as compare to 47% of its total revenue in FY17.
The FY18 topline growth for non-real estate business was mainly driven by higher revenue from the group’s consumer, automotive and heavy equipment segments that helped partially offset the slowdown in its real estate sales, which was down 36% y-o-y to $42.6 million.
See: Yoma's 4Q earnings fall 86% to $3.5 mil; in JV with Little Sheep to open hot pot restaurants in Myanmar
Hence, CGS-CIMB Research likes Yoma as it is tipping the balance towards its non-real estate business.
The group’s automotive and heavy equipment revenue increased by 34% y-o-y to $51 million in FY18, as it sold 911 tractors, compared to 692 a year ago, benefiting from the continued mechanisation of Myanmar’s agriculture sector.
Other revenue growth drivers were the expanding passenger and commercial segments, in which Yoma provides distribution and after-sales service for international brands, including Mitsubishi Motor and Volkswagen in Myanmar.
In addition, the group’s consumer revenue saw a 30% y-o-y rise to $14.2 million, as it continues to expand its network of KFC outlets in Myanmar. As at May 30, the group has 23 KFC outlets in Myanmar and is targeting to open another nine more by Mar 2019.
In an unrated report on Thursday, analyst Colin Tan says, “Although the consumer segment incurred EBITDA losses in FY18, management stated during Yoma’s FY18 results briefing at end-May 2018 that it aims to achieve EBITDA breakeven soon from increasing economies of scale.”
On the other hand, the group has in its belt a new growth pillar in its financial business, following the acquisition of a 34% stake in Wave Money in March, in addition to its existing vehicle-leasing business, Yoma Fleet.
See: Yoma acquiring 34% stake in Myanmar's Wave Money for $25.6 mil
As at Mar 31, the group’s borrowings stood at $243.5 million, with a muted net debt-to-equity ratio of 29.4%.
However, it had net liability exposure of about $111 million in USD at end-FY17 and its net interest expenses rose $5.7 million to $11.2 million in FY18 due to higher borrowings and amid the rising interest rate environment.
Currently, the stock is trading at 12.4 times forward earnings and 1.0 times current book value, which is below its historical 7-year average of 29.4 times and 1.6 times, respectively, based on Bloomberg consensus estimates.
As at 12.25pm, shares in Yoma are trading at 37 cents with a consensus estimate FY19 dividend yield of 0.8%.
