10 Quick Things Investors Should Know About Yoma Strategic Holdings Ltd’s Latest Earnings

In early February, Yoma Strategic Holdings Ltd (SGX: Z59) released its third quarter earnings update for its fiscal year ending 31 March 2018 (FY2018). As a quick introduction, Yoma Strategic is a conglomerate that focuses on Myanmar. It has business interests in a wide variety of sectors in the country, such as real estate development, agriculture, tourism, vehicle distribution, and food and beverage retail.

Here are 10 things investors should know about Yoma Strategic’s latest results:

1. Revenue for the reporting quarter was up 0.1% year-on-year to S$24.05 million.

2. But, gross profit declined by 34.9% to S$6.49 million compared to a year ago, mainly due to a higher proportion of the conglomerate’s revenue coming from the Automotive & Heavy Equipment segment, which has inherently lower margins compared to the Real Estate segment.

3. Net profit attributable to shareholders jumped by 1,353% year-on-year to S$16.85 million mainly on the back of one-time gains related to the spin-off of its Myanmar tourism-related business.

4. During the reporting quarter, Yoma Strategic generated a negative S$20.75 million in operating cash flow, down from the positive S$28.74 million seen a year ago.

5. As of 31 December 2017, Yoma Strategic had S$22.34 million in cash and S$178.42 million in debt.

6. Revenue from the Automotive & Heavy Equipment business increased by 36.3% year-on-year to S$13.9 million in the reporting quarter, driven largely by significant growth in the New Holland tractors business which climbed 43.9% to S$11.8 million.

7. The addition of new stores resulted in revenue from the conglomerate’s KFC restaurant business (this falls under the Consumer category) jumping by 30.0% year-on-year to S$3.9 million.

8. As mentioned earlier, Yoma Strategic had spun-off its non-core tourism-related business during the reporting quarter. This resulted in a one-off net gain of S$27.66 million. After the spin-off, Yoma Strategic now owns 47.6% of the tourism business, which is a Singapore-listed company called Memories Group Ltd (SGX: 1H4).

9. In November 2017, Yoma Strategic issued 155 million new shares at S$0.53 each under a private placement exercise. For perspective, the conglomerate’s share count stood at 1.894 billion as of 31 December 2017.

10. In its earnings release, Yoma Strategic had given useful comments on the state of its core businesses:

“The Condominium by-laws issued by the Myanmar Ministry of Construction in December 2017 allows foreign buyers to own up to 40 percent of the total floor area of a condominium building. Furthermore, registered condominiums will soon be eligible for strata title and this will support the development of a domestic mortgage market. The Group will explore the possibilities of applying for condominium status for its projects once the relevant committees and a Condominium Registration Office to administer the by-laws are established.

With the continued progress in construction work for Yoma Central and the Peninsula Yangon helmed by joint ventures of Bouygues Construction and Taisei Corporation, the Group is looking to formally launch sales of the Peninsula Residences in the coming months.

The Group is currently fulfilling an additional order of 500 New Holland tractors organized by the government’s Agriculture Mechanisation Department with revenue expected to be recognised progressively in the coming months. At the same time, the Group is also seeing traction with its JCB construction equipment business and currently has five Yoma JCB branches with two more branches expected to open in 4Q2018.

The KFC store expansion outside of Yangon has been progressing well. Subsequent to 3Q2018, the Group opened three more KFC stores in Yangon and two KFC stores in Bago, bringing the total number of KFC stores nationally up to 21. The performance of existing KFC stores and new KFC stores is expected to continue to drive revenue growth. KFC continues to be the leading quick service restaurant brand in Myanmar and aims to operate at least 32 KFC stores nationwide by the end of March 2019. As the consumer market in Myanmar continues to record a healthy growth, the Group intends to explore other opportunities in this space.”

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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.