• FY17 results within expectations
• c.47% of revenues from non-RE segments
• 0.25 S-cents dividend proposed

~47% of FY17 Revenues Attributed to Nonreal Estate Segments

Yoma’s 4QFY17 PATMI increased to S$24.1m, up from S$8.9m in the same period last year mostly due to higher fair value gains on investment properties and improved gross profit margins driven by the sales of residences and LDRs in 4QFY17 (as compared to mostly sale of buyback units in StarCity in 4QFY16). Full year FY2017 PATMI of S$35.9m is down marginally by 3.5% versus S$37.2m in FY2016 and we deem this set of results to be mostly within expectations.

In terms of the topline, FY2017 revenues increased 11.0% to S$124.2m. Notably, about 47% of revenues were attributed to the Yoma’s non real estate businesses which points to management’s diversification efforts bearing fruit. Specifically, revenues from the automotive and heavy equipment business increased 27% in FY2017 to S$38.1m due to the growth in its New Holland tractor business.

The group’s consumer business, which comprises its KFC operations, also saw its revenues more than doubled to S$10.9m in FY2017 versus S$4.6m last financial year. For its real estate segment, however, revenues generated from the sales of residences and LDRs decreased by S$4.0m to S$46.5m in FY2017; that said, this decline was partially offset by a S$1.5m increase in contributions from the real estate and services segment. A final and final cash dividend of 0.25 S-cents per share has been proposed.

Yangon Property Market Showing Mild Signs of Recovery

Looking ahead, while the property market in Myanmar saw some softness over the year, the management team sees mild signs of recovery in the Yangon area and remain cautiously optimistic.

Yoma also expects to deliver the remaining 436 units (out of a total of 600) of New Holland tractors to farmers in a sale which is expected to contribute S$11m of revenues ahead. In addition, the group will be opening its first KFC store in Mandalay in Jun 2017 and will increase its store count nationwide to 22 by the end of FY2018.

Maintain HOLD with an unchanged fair value estimate of S$0.54.

Source: OCBC Research - 25 May 2017