Two weeks ago, I travelled to Yangon, a city in Myanmar, as an observer for a shareholder?s trip that was organised by Yoma Strategic Holdings Ltd (SGX: Z59).
The company?s purpose for setting up the trip was to allow its investors to better understand its business. The company is involved in a wide array of businesses and they are all mainly focused on the once-reclusive Myanmar.
For me, the highlight of the trip was the great opportunity to have a close-up look at Myanmar and get a first-hand feel for the opportunities that may lie await in the country. Another plus point about…
The company’s purpose for setting up the trip was to allow its investors to better understand its business. The company is involved in a wide array of businesses and they are all mainly focused on the once-reclusive Myanmar.
For me, the highlight of the trip was the great opportunity to have a close-up look at Myanmar and get a first-hand feel for the opportunities that may lie await in the country. Another plus point about the trip was the chance to get to understand Yoma Strategic a little better.
One aspect of Yoma Strategic that I learnt about in the trip and which I find interesting is its on-going effort to change from a project-based company (Yoma Strategic currently deals mainly with property development, which is a lumpy business with very little recurring elements to it) into one with recurring revenue streams. One of the ways the company is changing itself is through the retail of fried chicken.
Frying its way to success
One major development for Yoma Strategic over the past two years has been winning the master franchise for KFC outlets in Myanmar from Yum! Brands Inc. KFC, as many in Singapore are likely to be familiar with, is a fast-food restaurant specializing in fried chicken.
In 2015, Yoma Strategic opened its first flagship KFC store in Yangon and received a great response from consumers. According to Yoma Strategic’s management team, the company has plans to have 12 stores up and running within the next year or so. This expansion of the KFC franchise in Myanmar can help Yoma Strategic in its aim to be a company with a larger stream of recurring revenue.
To put the KFC opportunity in Myanmar into perspective, QSR Brands (M) Holdings in Malaysia currently runs over 750 KFC restaurants in Malaysia, Singapore, Brunei, and Cambodia. In 2014, these four countries had a combined population of 51.1 million according to data from the World Bank; in the same year, Myanmar had a population of 53.44 million. So, there is clear potential for Yoma Strategic’s KFC franchise in Myanmar – but that’s provided the country can grow concurrently as well.
In an earlier article, I had noted the huge future potential for one of Yoma Strategic’s real estate development projects in Myanmar. But at the same time, I also highlighted how there are substantial risks involved, especially with the country’s politics and economic development.
It’s the same with Yoma Strategic’s KFC franchise – I think the success of it would also depend greatly on the progress of Myanmar, in addition to the execution chops of the company’s management team.
There are no guarantees that Yoma Strategic will succeed. Investors who are interested in the company should take a deep look at it – on things such as the company’s valuation and the opportunities and risks with the firm’s multiple business segments – before any investing decision can be reached.
For more investing commentary and analyses, and to keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.
Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in any companies mentioned above.