Yoma Strategic Holdings

Yoma Strategic Holdings | Buy

Target price: S$0.58

May 31 close: S$0.405

DBS Group Research, May 31

Despite some disappointment on Myanmar's economic growth, we believe Yoma remains the best proxy of a potential economic turnaround in Myanmar with the new government in place.

With its diversified portfolio in property, consumer and automotive sectors, Yoma is well placed to tap into the growth.

Potential catalysts include recovery in Myanmar's property market and its non-real estate businesses turning profitable.

Yoma's FY18 net profit fell 26 per cent year-on-year to S$27 million largely due to lower profit contribution from its real estate business, and lower fair value gains, mitigated by a S$28 million gain from the sale of its tourism business and currency translation gains of S$10 million versus S$3 million loss in FY17.

The non-real estate business recorded strong revenue growth of 33 per cent y-o-y. Yoma has entered new business ventures – franchisor of Little Sheep Hot Pot and joint-venture with Pernod Ricard on whisky.

We remain positive on the group's prospects and see it as a beneficiary of an improved economic outlook with the new Myanmar government. Myanmar is still a developing country and its real estate and infrastructure sectors are in the nascent stage of the cycle. As such, continued supportive government policies on foreign investments are key to improving sentiment within the real estate space.

We maintain our Buy rating but lower our target price to S$0.58 from S$0.75 based on a lower RNAV (revalued net asset value) of S$0.97 (previously S$1.08) and a higher discount to RNAV of 40 per cent (previously 30 per cent).

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