• Yoma reported FY24 revenue growth of 80% YoY to US$221mn and EBITDA jumped 160% to US$46mn. Growth was driven by property development sales and Wave Money.
• Excluding fair value gains, currency impact, and impairments, we estimate adjusted net loss in FY24 of around US$15mn (FY23: US$26mn). Yoma has further deleveraged with net debt dropping to US$36mn (FY23: US$73mn). This is a huge decline from the net debt of US$284mn two years ago.
• We expect Yoma to report further earnings growth in FY25 led by property development, Wave Money and F&B. Property division has a revenue backlog of US$147mn (FY23: ~US$34mn), representing 1.5 years of FY24 revenue. Sales will be further supported by new launches at City Loft West. Wave Money will benefit from the rise in digital transactions and stable transfer volumes. F&B margins are expected to recover from price increases after the recent fuel and utility costs spike. Yoma remains committed to deleveraging through the disposal of non-core assets and generating operating cash flows. Currency depreciation is the largest challenge. Translation losses dragged down the book value by around US$90mn in FY24. The share price is currently trading at a 62% discount to its book value of US$0.164.

The Positive

+ 10-fold spike in property development profitability. Property sales jumped 105% to US$94mn in FY24. The profitability of the property division spiked 10-fold to S$22.9mn. Many projects launched enjoyed stellar responses and were fully sold out. The strategy towards a more affordable and differentiated offering has supported City Loft @ StarCity and Estella sales. Unrecognised revenue is US$147.1mn (FY23: US$33.8mn), which will be realized over the next 12-18 months.

The Negative

– Currency devaluation and Yoma Central losses. The decline in Myanmar kyat has impacted FY24 results at multiple levels. There are currency losses from trade payables in US dollar terms and translation losses on US dollar loans. On the flip side, there was a fair value gain on investment properties of US$45mn at Yoma Land Services. The subsidiary reports in kyat and weakness in the currency caused a fair value gain despite stable property value in US dollar terms. Yoma Central registered a net loss of US$23mn in FY24.

Outlook

We do not expect any major recovery in the Myanmar economy. ABD estimates Myanmar’s GDP growth to be 1.2% in 2024 (2023: 0.8%).

The following are our expectations in FY25 for the 3 key divisions:

• Yoma Land: Unrecognised revenue of US$147.1mn will support earnings in FY25. The priority in FY25 will be to complete the record project sales. There will still be new launches namely 2 buildings in City Loft West. We believe both towers could generate sales of almost US$40mn if fully sold. Demand has been supported by affordable pricing and differentiation (such as solar power at Estella).
• Wave Money: Money transfers (or OTC revenue) are the key earnings contributors. In 2H24, money transfers were US$5.9bn. We expect the value transferred in FY25 to be stable. The economy’s general health is dependent on this. The majority of the growth will come from digital payments and float as Wavemoney builds a stronger ecosystem of merchants and customers around its platform.
• Food and Beverage (36 KFC and 37 YKKO restaurants): EBITDA in 2H24 fell 26% YoY to US$1.4mn due to one-time settlements and rising utilities. A fuel shortage late last year spiked diesel prices to power the restaurants’ generators. Margins were temporarily pulled down as Yoma raised their menu prices to recover margins. There are also plans to open 2 to 4 new restaurants.

Source: Phillip Capital Research - 3 Jun 2024