Has Yoma Strategic Holdings Ltd Started On Its Next Growth Phase?

Yoma Strategic Holdings Ltd (SGX: Z59) is one of the best-performing stocks in the local market over the past year. From a price of S$0.45 on 27 July 2016, the company has seen its shares climb by over 30% to S$0.60 currently.

Growth in Yoma Strategic’s non-property businesses over the past year may have played a role in its share price gains. In its fiscal year ended 31 March 2016 (FY2016), it set up a Food & Beverages business segment that reported annual turnover of S$4.6 million. Meanwhile, its Automotive segment saw revenue more than triple from S$8.83 million a year ago to S$30.0 million.

2015 also saw a historic event take place for Myanmar. In November, the country successfully held its first ever openly-contested general election since 1990. The subsequent handover from the former leaders to the newly-elected government was also smooth. This may also help explain Yoma Strategic’s share price gains over the past year since the company conducts the bulk of its business in Myanmar.

Now, the company may have just found a new avenue for growth: Yoma Strategic announced the signing of two new master leases for its Landmark Development yesterday.

The Landmark Development is one of Yoma Strategic’s property development projects. The company, together with other equity partners, would be redeveloping a 10-acre plot of land seated right in the city-centre of Yangon, Myanmar.

Discussions for Landmark Development have been going on for years with Yoma Strategic working out suitable plans both with its partners and the government of Myanmar.

Together with the announcement of the master leases, Yoma Strategic also revealed details about Landmark Development. The project would be separated into two sections. One would be a mixed-use development consisting of residential, commercial, hospitality, and retail spaces. The other will be for the restoration of the former headquarters of the Burma Railway Company into The Peninsula Yangon, a heritage hotel.

Yoma Strategic will hold a 48% stake in the mixed-use development, which has a total projected development cost of US$660 million. Yoma Strategic also has a 24% stake in The Peninsula Yangon and the company expects to contribute US$38 million for the development of the hotel.

All told, Yoma Strategic estimates that it will have to fork out total net-cash of between US$128 million and US$156 million for Landmark Development. This development project would be one of the largest the company has attempted thus far and is expected to be fully completed by 2020. The net-cash contributions would be funded from internal resources, the sale of non-core assets, and debt.

Based on Yoma Strategic’s latest financials (as of 30 June 2016), it has total assets of S$980.4 million and a total debt to equity ratio of 14.5%.

But, it’s worth noting that the gross development value for Landmark Development was not disclosed by Yoma Strategic. So, it is still unclear how profitable the project might be for the company, however exciting it seems. But one thing’s for sure: It is going to be an interesting journey ahead for Yoma Strategic.

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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 doesn’t own shares in any companies mentioned.