Valuation
· The stock is currently trading at 87.0x FY14F PE.
Financial Highlights
· The group reported a net profit of S$14.4m in FY13 compared with S$6.0m in FY12. The boost in net profit is partly due to buoyant sales in the housing segment and land development rights as well as non-cash negative goodwill of S$9.1m of its retail mall in Dalian, China. Stripping this and the non-cash share-based payments to CEO and Employee Share Option Scheme, net profit would have doubled to S$12.3m.
· The real estate division remains the core revenue driver, contributing more than 90% of FY13 revenue. The company has sold more apartments in the Pun Hlaing Golf Estate and Star City during the financial year, and as at 31 Mar 13, the company has S$55.9m of property sales yet to be recognised. Gross margin also improved from 29.8% to 43.3% in FY13 due to higher selling prices for its land development rights and properties.
Business updates
· Yoma is currently embarking on one of the most iconic development projects in downtown Yangon, named as the Landmark Development Project. Although the company is still waiting for the final approval from the Myanmese government, this is a 2m sf GFA mixed-use development that comprises a 5-star hotel and condominium, 4-star hotel and serviced apartment and two Grade-A office towers and a retail mall.
· Accordingly, Yoma has entered into a non-legally binding agreement with The Hong Kong and Shanghai Hotels, Limited, owner, developer and manager of The Peninsula Hotels, to jointly develop the 5-star hotel in the project.
· On the retail business segment, PMIC (a three-party JV between Yoma, Parkson Myanmar and FMI) will hold a soft launch its 57,000sf departmental store in this month, and brands such as D&G, DKNY etc. will be brought to Myanmar for the first time.
· Recently, Yoma and First Myanmar Investment (FMI) entered into luxury tourism where they will acquire hot air balloons operator Balloons over Bagan (BOB) for US$10.7m. They will also acquire a 20-acre prime site in Bagan to develop a high-end boutique hotel.
Our view
· Myanmar’s economy seems to be opening up faster than expected with many multi-national companies eyeing a pie on its rich natural resources. On 11 April, Myanmar’s government opened an auction of 30 blocks of offshore oil and gas and we believe many international oil companies will be keen to tender.
· We also expect the tourism industry in Myanmarto register strong growth due to its natural beauty and wealth of Buddhist monuments. However, as tourist numbers have risen to about 1m a year, the lack of hotels have caused hotel prices to rocket. In our view, Yoma will continue to remain in a sweet spot within the hospitality sector, developing apartments, hotels and commercial properties, catering to the needs of tourists and business expatriates.
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