The Good And Bad That Investors Should Know About Yoma Strategic Holdings Ltd’s Latest Earnings

Yoma Strategic Holdings Ltd (SGX: Z59) is a conglomerate that focuses on Myanmar. It has business interests in a wide variety of sectors, such as real estate development, agriculture, tourism, vehicle distribution, and even food & beverage retail.

In late October, Yoma Strategic released its second quarter results for its fiscal year ending 31 March 2018 (FY2018). There are both positive and negative takeaways from the company’s latest earnings that investors may want to learn about. Let’s take a look, starting with an overview of the numbers:

1. The overall numbers

You can see Yoma Strategic’s income statement for the reporting quarter below:

Source: Yoma Strategic FY2018 second quarter earnings announcement

We can see that the second quarter of FY0218 was a mixed quarter for the company. There was strong double-digit growth in revenue, but the net profit attributable to shareholders declined sharply. Yoma Strategic’s higher revenue came on the back of strong top-line growth in its Automotive & Heavy Equipment and Consumer business segments.

2. The positives

Firstly, the Automotive & Heavy Equipment business saw its revenue jump by 109.9% year-on-year to S$14.63 million due to an increase in sales of New Holland tractors and higher vehicle leasing activity. The segment is expected to deliver another 651 tractors “in the coming months.”

Secondly, Yoma Strategic’s Consumer business segment (which houses its KFC franchise business in Myanmar) experienced a 20.1% year-on-year increase in revenue to S$3.28 million. The segment currently has 16 KFC restaurants in operation, and has a target of 22 stores by March 2018.

Thirdly, the company’s gross margin improved from 41.4% a year ago to 44.7% in the reporting quarter, driven mainly by higher margin in its real estate businesses.

3. The negatives

Firstly, a significant amount of the conglomerate’s profit in the reporting quarter came from a fair value gain from the transfer of development properties to investment properties. The sum involved was S$5.67 million. If this gain was excluded, Yoma Strategic would have just broke even for the quarter.

Secondly, Yoma Strategic’s total debt increased 118% from S$89.4 million a year ago to S$197.1 million. Yet, its cash and cash equivalents only increased from S$28.3 million to S$67.0 million. Putting both together, we can see that Yoma Strategic’s net debt has more than doubled from a year ago (S$61.1 million vs. S$130.1 million).

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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.