Yoma Strategic

CIMB Research, Jan 17

YOMA reported sales of S$30.2 million in Q3 2014, up 132.5 per cent year on year. Sales of residential properties (S$10.95 million) and land development rights (LDRs) (S$16.22 million) contributed to 90 per cent of the group's total sales. In addition, Yoma's tourism business recorded revenue of S$2.05 million for the first time. The Q3 2014 sales include the sales of LDRs related to two buildings in Star City Zone B, amounting to S$14.56 million.

We expect no more pure LDR sales ahead. In that sense, revenue recognition is likely to slow down in Q4 2014. 9M 2014 core Patmi (profit after tax and minority interests) of S$10.4 million exceeded our full-year forecast of S$9.8 million due to the lower-than-expected tax expense. Management has explained that a significant portion of its earnings was derived from entities that incurred higher losses previously, and entities that are not subject to income tax.

In light of this, we revise up our FY2014 core earnings by 14.8 per cent to S$11.2 million (core EPS up from 0.83 Singapore cent to 0.95 Singapore cent).

On Dec 20, 2013, the company announced the extension of the long stop date for the acquisition of the site of the Landmark Development, for the third time, to June 2014. The base case of our sensitivity analysis shows that, if the deal is sealed, the Landmark Development could add nine Singapore cents to our valuation.

The upward adjustment of FY2014 EPS has minimum impact on our FY2015 RNAV. And given the still unconfirmed Landmark acquisition, our current target price stays at S$0.75. Maintain the "reduce" recommendation.

REDUCE