• 2QFY15 figures boosted by FV gains
• Star City Zone C to launch 2QFY15
• Lower our FV estimate to S$0.74

Boost from FV gains from investment properties

2QFY15 PATMI increased 222% YoY to S$10.8m, mostly due to S$8.1m of fair value gains recognized from completed units in Star City’s Building A5 retained as investment properties (up from S$6.42 in 1QFY15) and S$1.9m from an FX gain in USD monetary assets. Overall, we judge these figures to be mostly in line with our expectations; after netting out the FX gain, 1HFY15 results constitute 57% of our full year forecast. In terms of the topline, 2QFY15 revenue increased 52.9% to S$41.2m as the group recognized higher sales from property developments and land development rights from Star City.

Sale of Zone C LDRs to third party investment

Sales in Star City remain firm; as at end Sep-14, 528 units have been sold in Zone A. Yoma has also sold 856 units in Zone B and received booking deposits for an additional 106 units since its launch in Apr-13. Total revenue from Zone A cumulates to S$61.5m as at end Sep 14, though only S$37.8m has been recognized to date. We expect the remaining S$22.7m to be booked over the next 3 – 9 months. In addition, the 150 units in Building A5, retained as investment properties, are expected to provide stable recurring income ahead. Yoma will launch Zone C in 2HFY15 and has similarly arranged to sell the LDRs to a third party investor and manage the construction and sale of the units. As a result, Yoma booked S$25.2m for the LDR sale in 2QFY15 and will also receive S$1.5m over the next eight quarters, in addition to a share of the profits of the eventual sale of Zone C apartments.

Lower fair value estimate to S$0.74

Due to a slower global economic outlook, we raise our discount rate from 10% to 12% to reflect higher market risk and also temper our price projections by 5% to 10% across Yoma’s projects. We maintain a BUY rating but our fair value estimate falls from S$0.82 to S$0.74.

Source: OCBC Research - 30 Oct 2014