How Profitable Are Yoma Strategic Holdings Ltd’s Different Businesses?

Yoma Strategic Holdings Ltd (SGX: Z59) is a conglomerate with a wide range of businesses that are all focused on Myanmar.

Over the past five years, the company’s stock price has climbed by 339%, making Yoma Strategic one of the best performers in Singapore’s stock market.

Given the strong performance, investors may want to better understand the company and its various business activities.

In here, I want to take a look at the profitability of each business segment that Yoma Strategic has. More specifically, I want to understand how well each segment is doing when it comes to making a profit on each dollar of Yoma Strategic’s equity that they employ. In other words, I want to calculate the return on equity for each segment (the return on equity is found by dividing each segment’s profit with its net assets, or equity).

So, here are the important numbers I need from Yoma Strategic’s latest annual report for the financial year ended 31 March 2016 (FY2016):

Source: Yoma Strategic FY2016 annual report

Using the numbers above, here are each segment’s return on equity:

Source: Yoma Strategic FY2016 annual report

Yoma Strategic has experienced very rapid revenue growth over its last five fiscal years (revenue has increased by 185% in all). But most of the businesses under the conglomerate are still unprofitable. The ones that are profitable also generate really low returns on equity in the single-digit range.

Given Yoma Strategic’s focus on Myanmar, many investors could see it as an attractive avenue to participate in the country’s economic growth. According to the Asian Development Bank, Myanmar’s economy has expanded by over 7% in each year from 2012 to 2015. Its economy is also projected by the bank to increase by over 8% annually in both 2016 and 2017.

But, investors need to separate Myanmar’s economic growth with Yoma Strategic’s ability to execute well in its business in the future. No one knows for sure if the company can excel in execution in the years ahead. But right now, as we’ve seen earlier, many of the businesses under its belt are still unprofitable.

And, although Yoma Strategic recorded S$37.2 million in net profit attributable to shareholders in FY2016, it was mainly due to a one-off fair value gain in its associate.

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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned.