Felicia Tan  Published on Wed, Dec 02, 2020 / 2:16 PM GMT+8 / Updated 5 hours ago

PhillipCapital analyst Tan Jie Hui has maintained her &ldquo buy&rdquo call on Yoma Strategic Holdings and target price of 46 cents after the group&rsquo s 2HFY2020 and FY2020 topline met expectations at 98% and 100% of her forecasts respectively.

Despite the impact of the Covid-19 pandemic, 2HFY2020 revenue saw a 25% increase y-o-y, mainly contributed by real-estate development and automotive and heavy equipment, which saw y-o-y increases of 117% and 34% respectively.

While core operating EBITDA remained positive, Yoma Strategic registered lower gross profit margins and net fair value losses from its properties in Myanmar and China, which led to a net loss that was 15x more than expected, says Tan.

  In addition, the group saw losses due to its subsidiaries&rsquo conversion of the US dollar (USD) to the Myanmar kyat (MMK). Yoma also booked its share of losses from Memories Group, whose tourism operations were affected by Covid-19 and translation losses on borrowings.

Gross profit margins in FY2020 plunged to 32% from FY2019&rsquo s 50%, which was attributable to lower real-estate service revenue, which contributes one of the highest gross profit margins to the group.Other culprits were lower-margin products at Star City and lower consumer margins following higher packaging and delivery costs.

Looking ahead, Tan estimates Yoma&rsquo s F& B segment and Yoma Motors be remain &ldquo weak&rdquo in the near-term, but expects FY2021 group topline to be supported by &ldquo significant unrecognised revenue&rdquo at Yoma Land and Yoma Motors.

Tan is also looking at a turnaround in FY2022 when Yoma Central and Star Hub will be completed.
Upon its completion in mid-FY2022, Yoma Central is expected to generate US$90-US$110 million ($120.5-$147.3 million) of recurring revenue.

For Star Hub, it is expected to be completed by end-2021, where prominent companies in the technology and finance sectors have already committed to over 50% of the office space.
&ldquo Rental yields here are estimated in the mid-teens, to be generated from FY2022,&rdquo says Tan.

&ldquo Our valuation metrics and target price remain largely unchanged, including our 20% holding-company discount. Yoma Land constitutes 86% of its total valuation after net debt and overheads,&rdquo she adds.
As at 2.17pm, shares in Yoma Strategic are trading 0.5 cent higher or 1.8% up at 28 cents.