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

This morning, Yoma Strategic Holdings Ltd (SGX: Z59) released its first quarter earnings update for its fiscal year ending 31 March 2019 (FY2019). 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 ten things investors should know about Yoma Strategic’s latest results:

1. Revenue for the reporting quarter was up by 13.9% year-on-year to S$29.4 million.

2. Yet, gross profit declined by 1.6% to S$10.3 million compared to a year ago, mainly due to the lower gross margin profile in the real estate development business; the business saw its revenue jump by 63.4% to S$10.18 million.

3. Net profit attributable to shareholders turned from a positive S$2.82 million a year ago to a negative S$15.90 million in the reporting quarter. The main culprits were higher finance costs (largely due to the strengthening of the US dollar, in which the majority of the borrowings are denominated, against the functional currencies – the Chinese yuan and the Singapore dollar – of the borrowing entities), higher administrative costs, and a huge spike in share of losses from associates from S$0.02 million to S$2.62 million.

4. During the reporting quarter, Yoma Strategic generated a negative S$17.83 million in operating cash flow, down from a negative S$9.71 million seen a year ago.

5. As of 30 June 2018, Yoma Strategic had S$25.9 million in cash and S$307.2 million in debt. Its gearing ratio (net debt over total capital) stood at 23% at the end of reporting quarter.

6. Yoma Strategic’s real estate-related businesses grew their revenues by 44.8% year-on-year to S$15.15 million mainly due to higher property sales and service income

7. The addition of new stores and same store sales growth resulted in revenue from the conglomerate’s KFC restaurant business (this falls under the consumer business) jumping by 46.7% to S$4.49 million. The conglomerate has 24 KFC stores in Myanmar as of 30 June 2018.

8. The automotive & heavy equipment business recorded a 26.9% year-on-year decline in revenue to S$7.51 million mainly due to a lower number of New Holland tractors and implements sold. In the first quarter of FY2019, Yoma Strategic sold 125 tractors and 346 implements as compared to 243 tractors and 443 implements in 1Q2018.

9. Revenue generated from the financial services business (mainly from Yoma’s fleet leasing business) grew by 12.2% to S$1.9 million. The conglomerate’s fleet size increased to 872 vehicles and its total assets stood at S$41.5 million as of 30 June 2018.

10. In Yoma Strategic’s earnings update, Melvyn Pun, the CEO of the conglomerate, shared some comments on its business:

“Yoma Land’s revenue growth points to a stabilising property market. Whilst Yoma F&B and Yoma Financial Services continue to grow steadily, our results are negatively impacted by the large currency translation losses from our USD borrowings, which are used to finance our businesses tied to USD. Although the accounting currency translation losses are undesirable, we believe the economic value of the business is appropriately hedged.”

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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.