• FV gains from investment assets
• Star City recognition to pick up in 2HFY15
• PHGE acquisition and rights issue ahead

Fair value gains from completion of investment assets

Yoma reported 1QFY15 PATMI of S$1.4m, which increased 243% YoY mostly due to fair value gains (S$6.4m) recognized from completed units in Building A5 in Star City Zone A which have been retained as investment properties. Overall, we judge these figures to be mostly in line with expectations, after taking into account the lumpy nature of progress recognition due to the rainy season from May/June which decelerated the pace of construction. In terms of the topline, 1QFY15 revenue increased 13.9% to S$17.3m as the group recognized higher sales from property developments and land rights mostly from Star City.

Launch of Zone C of Star City anticipated in FY15

As at end Mar-14, 528 units have been sold in Zone A. We understand that S$8.2m of revenue was recognized over the quarter for Buildings A3 and A4, and management expects construction to pick up in 2HFY15 (unrecognized progress billings at ~S$27.6m). In Zone B, developed in collaboration with a third party investor, 724 units have been sold and the group has also received booking deposits for an additional 134 units. Management expects the incentive fees relating to sales for Buildings B3 and B4 to be recognized ahead when the sales targets are met. In addition, Zone C of Star City, comprising 914 units, is anticipated to be launched in FY15.

Proposed acquisition of Pun Hlaing Golf Estate

To recap, the group has recently been offered the right to acquire a 70% stake in 10.8m sq ft of land in Pun Hlaing Golf Estate (estimated at US$100m on 100% basis). Assuming that this proposed acquisition is approved by shareholders, the recently proposed rights of 1 for every 8 shares at S$0.38 would likely be revised to 1 for every 3 shares, which could take place in 2HFY15. Maintain BUY on Yoma with an unchanged fair value estimate of S$0.82.

Source: OCBC Research - 29 Jul 2014