Why Has Yoma Strategic Holdings Ltd’s Stock Price Fallen By 8% In The Last 3 Months?

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 food and beverage retail.

Over the last three months, Yoma Strategic’s stock price has declined by 8%. What may have caused this?

Reasons for a decline

There can be many reasons behind a stock’s price decline. But, the reasons can generally be classified as business-performance-related, or investor-sentiment-related.

The former deals with how a stock’s business has performed or is expected to perform. And in terms of business performance, one of the really important numbers would be the stock’s profits.

Meanwhile, the latter is about the overall mood of market participants – are investors more greedy than fearful, more pessimistic than optimistic et cetera? In general, negative emotions (fear and pessimism) tend to drag down the prices of stocks while positive emotions (greed and optimism) tend to push up stock prices.

The case with Yoma Strategic

In Yoma Strategic’s case, I believe it is the former at work.

The table below is a condensed income statement for Yoma Strategic from its latest set of results. It is for the second quarter of its fiscal 2018 (year ending 31 March 2018), and was released in late October.

Source: Yoma Strategic fiscal 2018 second quarter earnings press release

We can see that Yoma Strategic’s revenue in the fiscal second quarter was up by 32.9% year-on-year. Yet, its net profit was down by 13%, driven primarily by the absence of a one-off gain in the latest quarter and higher interest expenses.

Furthermore, Yoma Strategic raised S$82.2 million from the sale of new shares of itself in a private placement that took place in mid-November. The placement shares, which were priced at S$0.53 each, represented 8.2% of Yoma Strategic’s post-placement share count.

In sum, Yoma Strategic announced a decline in its latest quarterly profit in late October. Then, just a few weeks later, the company followed up with a private placement that diluted existing shareholders’ interests. The dilution caused a larger fall in Yoma Strategic’s earnings per share in the second quarter of fiscal 2018. This may be the cause of the company’s lower share price over the past three months.

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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.