• 3QFY15 numbers in line
• Completed 1-for-3 rights
• Fair value lowered to S$0.52

3QFY15 numbers broadly in line

3QFY15 PATMI increased 49.8% YoY to S$7.8m, mostly due to an unrealized forex gain and a stronger contribution from the “Balloons Over Bagan” tourism business. We judge this set of results to be broadly in line with our expectations; excluding forex and other non-core one-time gains, we estimate 9MFY15 core PATMI at S$14.6m which forms 80.6% of our full year estimate. In terms of the topline, 3QFY15 revenue declined 17.2% YoY to S$25.0m mainly due to lower recognition from Star City and the absence of a bulk sale of LDRs in Star City Zone B which occurred in 3QFY14, but partially offset by stronger sales at Pun Hlaing Golf Estate (PHGE), rental income from investment properties and also increased contributions from its non-real estate businesses.

Firm demand for rental units

Management reports firm demand for its rental units, given an increasing need for corporate housing near Yangon, and all of the group’s 16 units at PHGE and 66 out of 150 units in Star City A5 has been leased out. The remaining 84 A5 units are being furnished and will be made available for leasing from Mar-15. As at end Dec-14, 927 out of 1,043 units in Star City Zone B has been sold, with booking deposits received for an additional 46 units, and Yoma expects to launch Zone C in Feb-15.

Dilution from 432.5m new rights shares -downgrade to HOLD

After its 135m share placement last Jul, the group successfully completed another 1-for-3 rights issue and these 432.5m new rights shares will trade on the SGX today. We incorporate, into our valuation model, the dilution impact of the rights, latest sales data-points and marginally higher discount rates, and our fair value estimate dips to S$0.52 per share. In our view, the counter is likely fully valued here; downgrade to HOLD. We will turn buyers either at around S$0.47, or on more operational visibility regarding the Landmark project and the group’s various initiatives in infrastructure, logistics and agriculture.

Source: OCBC Research - 10 Feb 2015