Cambodia&rsquo s Hun Sen gives up on Myanmar

 

MAINBOARD-LISTED Yoma Strategic Holdings Yoma Strategic: Z59 +1.44%, in a business update on Monday (Feb 14), reported group revenue of US$24.4 million for the Q1 ended Dec 31, 2021, down 17.7 per cent from its US$20.8 million in Q1 FY2020.

 

The group, however, said its core operating Ebitda (earnings before interest, taxes, depreciation and amortisation) and profitability grew year on year during the quarter, due to " stringent financial management measures implemented over the past 12 months and a heightened focus on profitability and cash flow" .

 

While Yoma believes consumer activity in Myanmar has begun to recover in certain operating areas, the group said it will remain cautious in its business planning for the foreseeable future and will focus on deleveraging its balance sheet and managing its costs.

 

Yoma' s lower Q1 top line came on broad-based declines across all of its core business segments, which the group attributed to a sharp drop in Myanmar' s GDP (gross domestic product) over the past year.

 

Its main revenue contributor Yoma Land posted a 3.6 per cent lower revenue year on year, dragged by lower revenue from the real estate development subsegment as a result of Yoma Central' s temporary suspension.

 

The group' s food and beverage segment posted 17.5 per cent lower revenue on the termination of certain contracts, as well as an overall decline in transportation and warehousing demand from lower economic activity. Yoma nonetheless highlighted a recovery in same-store-sales growth and core operating Ebitda for its KFC and YKKO brands.

 

In the financial services segment where revenue fell 17.7 per cent, Yoma expects growth in the finance lease segment will continue to be impacted in the near-term until additional funding lines can be secured from banks.

 

It noted that revenue and transaction volumes from its fintech arm, Wave Money, continued to be affected by the broader slowdown in economic activities although Ebitda remained positive and margins have recovered to pre-pandemic levels.

 

The motors segment posted 47.2 per cent lower revenue for the quarter as its heavy equipment business continued to be affected by the availability of credit for its customers. Its automotive business also saw fewer transaction volumes after imports of all motor vehicles were suspended from October 2021.

 

YOMA Strategic Yoma Strategic: Z59 +0.75% said its subsidiary Yoma MFS Holdings (YMFS) has entered into a new share purchase agreement with Telenor group to acquire a controlling interest in Digital Money Myanmar (Wave Money) via a US$53 million deal.

 

Under the proposed deal, YMFS will fork out US$53 million in cash to acquire Norwegian telecommunications giant Telenor' s 51 per cent stake in mobile financial services firm Wave Money, comprising 510,00 ordinary shares and 17.9 million redeemable preference share, Yoma said in a bourse filing on Monday (Jan 17).

 

The mainboard-listed Myanmar-based group had previously proposed to increase its existing shareholding and take a controlling interest in Wave Money via a US$76.5 million deal with Telenor in June 2020. It had formed YMFS to restructure the holding of its interest in Wave Money.

 

Yoma later informed shareholders that the long stop date of Apr 30, 2021 to complete the proposed acquisition had not been extended, but remained in discussion with Telenor to explore opportunities regarding Wave Money.

 

According to Yoma, Wave Money is expected " to grow substantially" given that digitalisation of the financial system is a key priority for Myanmar' s central bank, despite the " challenging business environment and economic slowdown" in the country. This was the basis for the new proposed deal, it said.

 

Yoma said it intends to restructure the holding of its interest in Wave Money, such that Yoma MFS will hold the group' s existing 44 per cent interest in Wave Money.

 

It is also contemplating investing up to US$27.1 million in Yoma MFS for an additional 26 per cent effective interest in Wave Money and a consortium of investors - as new shareholders of Yoma MFS - would contribute the remaining Telenor consideration for the new proposed acquisition.

 

Upon completion of the new proposed stake purchase, YMFS will become the direct controlling shareholder of Wave Money holding a 90 per cent interest, including the 51 per cent stake from Telenor.

 

Yoma' s aggregate effective interest in Wave Money would be no less than 70 per cent, assuming that it acquires the additional 26 per cent interest in Wave Money, the company said.

 

In addition, the company granted one of the investors in the consortium the right to increase its effective interest in Wave Money by purchasing shares in Yoma MFS equivalent to up to a 15 per cent effective interest in Wave Money subject to certain terms, without ceding effective control in Wave Money.

 

The long stop date for completion is 180 days after the date of the new sales and purchase agreement.

 

As at Monday, the shareholders of Wave Money are the Telenor group (51 per cent), Yoma' s wholly-owned subsidiary, Yoma Strategic Investments (44 per cent), and Yoma Bank (5 per cent).