Yoma Strategic Holdings profits drops 5.8% to $3.7m in Q2

Blame the lack of a $14.7m fair value gain from their telco towers investment.

Yoma Strategic Holdings' (Yoma) profits crashed by 56.8% YoY to $3.7m in Q2.

According to OCBC Investment Research, there was an absence of a $14.7m fair value gain on the telecommunications towers investment which was recognised in Q2.

Revenue grew 32.9% YoY to $33.1m due to growth in its automotive & heavy equipment and consumer businesses.

Its automotive & heavy equipment business grew by 109.9% YoY to $14.6m due to healthy sales of its New Holland tractors.

Yoma has also agreed to buy back the development of Galaxy Towers (Zone C) at cost, entitling it to the share of profits in relation to the sales of units made previously.

Here's more from OCBC Investment Research:

Yoma has successfully grown its KFC store footprint from 12 in March 2017 to 16 in September 2017, and is also exploring the possibility of acquiring and developing new brands.

We think it is also possible for Yoma to consider a domestic brand, given that this could unlock greater efficiencies as the business scales up. In the Automotive & Heavy Equipment space, Yoma is expected to deliver another 651 tractors from sales that were organized by the government’s Agriculture Mechanisation Department. Potential retail tractor sales might also materialize as Myanmar heads into the peak dry season.

Looking ahead, while we believe that the real estate market is starting to stabilize, it still remains broadly slower than before, especially in relation to the mid-market segment.

To that end, we note that management is looking at redesigning its units at StarCity to cater to the mass market segment, which we understand to still see relatively robust demand.

Separately, the uncertainties over the Condominium Law passed in 2016 have yet to be clarified, and this could continue to rein in further optimism in the local property market, in our opinion.