Home » , , , » Yoma Strategic Holdings - Tipping the balance towards non-real estate business

Yoma Strategic Holdings - Tipping the balance towards non-real estate business

Shared By Stock Fanatic on Saturday, June 30, 2018 | 30.6.18

Yoma’s share price dipped 30% YTD to 12.4x forward P/E and 1.0x current P/BV based on Bloomberg consensus estimates, below 7-year historical average for both.

■ Its non-real estate business continues to grow, accounting for 60% of FY3/18 revenue, despite the slowdown in Myanmar’s real estate market.

■ Management is optimistic on achieving EBITDA breakeven in the consumer segment (c.13% of FY18 revenue) as Yoma scales up its KFC business in Myanmar.

■ Introduced a new business pillar – financial services – after its recent acquisition of a 34% stake in Wave Money to tap on mobile financial services growth in Myanmar.

■ Net debt-to-equity ratio of 29.4% at end-FY18. The company faces interest rate risk due to increase in borrowings in FY18.

Scaling up its non-real estate business
Revenue generated from the non-real estate business has grown 33% yoy to S$65.2m in FY18, accounting for 60% of total revenue (up from 47% of group revenue in FY17). FY18 topline growth for the non-real estate business was mainly driven by higher revenue from its consumer, automotive and heavy equipment segments that partly offset the slowdown in real estate sales (down 36% yoy to S$42.6m in FY18).

More New Holland tractors sold
Automotive and heavy equipment revenue was up 34% yoy to S$51m in FY18, as Yoma sold 911 tractors during the year (compared to 692 tractors in FY17), 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.

Hopes for turnaround in EBITDA for consumer business soon
Yoma’s consumer revenue has rose 30% yoy to S$14.2m in FY18, as it continued to expand its network of KFC outlets in Myanmar (23 as at 30 May 2018). The group targets to add another nine stores by Mar 2019F, slowing its pace of new outlet openings from 10-11 in FY18. 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.

New growth pillar – financial services
Financial services became a stronger fourth pillar of Yoma’s business (6.3% of FY18 revenue) with the acquisition of a 34% stake in Wave Money (Unlisted) for c.S$25.7m in Mar 2018, in addition to its existing vehicle-leasing business (Yoma Fleet). Wave Money offers a convenient way of transferring money via mobile app and has seen its user base grow from zero in Oct 2016 to 1.3m (c.2.5% of Myanmar’s adult population) in Feb 2018, translating into a compound monthly revenue growth rate of 22% from Jan-17 to Jan-18.

Muted net debt-to-equity ratio but faces interest rate risk
As at 31 Mar 2018, Yoma’s borrowings amounted to S$243.5m, with net debt-to-equity ratio of 29.4% (up from 19.7% in FY17). The group had net liability exposure of c.S$111m in US$ at end-FY17 and its net interest expenses rose $5.7m to S$11.2m in FY18 due to higher borrowings and amid the rising interest rate environment.

Technical Analysis
Daily Chart
Trading at 12.4x forward P/E based on Bloomberg consensus
Based on Bloomberg consensus estimates, the stock is currently trading at 12.4x forward P/E and at 1.0x current P/BV, below its historical 7-year average of 29.4x and 1.6x, respectively. Consensus estimates FY19F dividend yield of 0.8%.

Source : CGSCIMB Research
(Read Report)

“If you like what we have delivered to you, kindly make a small contribution.”
“Your donations will help fund the continued development and growth of our projects.”

Posted on Saturday, June 30, 2018 | 30.6.18
With No comments

Join Me On: Facebook | Twitter | Google Plus ::: Thank you for visiting ! :::
Share this article :

Post a Comment

Modified by : Stockfanatic
Copyright © 2008 - 2018. Singapore Stock Market News - All Rights Reserved
Template Created by Creating Website Published by Mas Template
Proudly powered by Blogger
Related Posts with Thumbnails